Researchers in Sweden have a paper out in Stem Cells that tries (keyword: tries) to put the kibosh on the transdifferentiation hopes. They took purified hematopoietic (blood-forming) stem cells and cultured them in neural differentiation medium.
Culturing embryonic stem cells in said medium causes them to develop toward a neural fate, so these researchers were checking to see if the same culturing medium would cause adult stem cells to transform into a neural type. Unsurprisingly, this doesn't work. But it's not all that bad.
Previous studies that have shown transdifferentiation failed to use pure populations of hematopoietic stem cells, meaning they were "contaminated" by a variety of non-hematopoietic stem cells. There is a very strong possibility that these "contaminating" cells contributed to the observed transdifferentiation.
The reason? In newts, regeneration occurs naturally. Slice off their leg, they'll grow a new one. Really, really cool stuff. If humans could do this, it would be even cooler. But they can't.
Or can they?
Regeneration in newts is made possible by their native satellite cell population. Humans have a similar population of cells that help regenerate damaged skeletal muscle tissue. If it's damaged, the satellite cells move into action. These satellite cells also contribute to wound healing.
Regeneration in humans is, therefore, possible. It is limited, however, by its environment. By correctly manipulating the environment (to allow for transdifferentiation or redifferentiation), it is very likely that the regenerative abilities of humans can be enhanced to promote complete limb regeneration. Amputees would no longer be forced to rely on prosthetic limbs.
Transdifferentiation probably is not directly possible in humans, but if coaxed along through the proper series of steps, it can (or should) be possible. (If transdifferentiation occurs through a series of steps, I believe it's more commonly referred to as redifferentiation, but it's the same thing.)
This is cool stuff. Let me tell you.