How can I make the transmute spell more useful for producing silver ore?
Cast two copies of the spell at a time, one in each hand (not dual-casting with the perk; two separate casts). If both casts occur at the same time, you should only see one "Silver Ore Added" message, but two Iron from your inventory will have been turned into Silver. It doesn't seem like a huge improvement, but it does effectively double the rate at which you can convert from Iron to Silver.
As a PS3 user myself, there is no other way I know of but to slave away at dropping the silver ore and then transmuting.