It was fixed in Pokémon Yellow. In Yellow it is no longer possible to use Select to swap moves under Transform. When the player tries to use Select the arrow doesn't turn white (which normally indicates that the position can be swapped with another Select), and it goes back to the top of the list of moves.
If the player switches the positions of two of a Pokémon's moves after transforming (via the Select button), then the positions of its real moves will be swapped after the battle.
Obtaining the '-' as the first move
See - (move) for more information.If the user's Pokémon has less than four moves, then '-' (also known as the 'CoolTrainer move') is available.
The easiest way to do this is to obtain a Ditto from e.g. Route 15 (east of Fuchsia City), then encounter a wild Pokémon with more than one move. Swap the 2nd, 3rd or 4th move with the first, then at the conclusion of the battle the first move will be replaced with "-".
After obtaining '-' as the first move it may have 0/13 PP at first, and healing at a Pokémon Center won't restore its PP. However, if the player uses a certain PP restoring item (Ether or Max Ether only), it's possible to use the move.