Vancouver guy. Runner and adventurer.
You can not let it get in the way of the friendship, don’t let this become about you. If you have issues with her transition, that’s fine, but talk to her about it and earnestly try to deal with it. Allow yourself some transition time in terms of pronouns/name/contextualizing things.
She’s the one transitioning, and if you just can’t deal with it then it may be a good idea to step aside for a while until you can deal with it. It’s ok to feel confused, and you may have your concerns, but she’s your friend and she needs your support. This might not make sense to you now, but if you have her best interests in mind then try to give neutral support and just be there for her. You don’t have to push her into transition, and you don’t have to see her as a woman all at once (that’s usually a gradual thing). Let things happen gradually and just focus on being her friend, just as you were before (just switch up the pronouns and be sensitive to her female gender identity).
My friends all took it very well. Granted it took some people more time than others to switch pronouns and to really come to terms with things, but I think the bottom line is that it will only get in the way if you let it. You’re her friend. You aren’t having sex with her and you probably don’t see her junk much (if at all) so if her biological gender and her gender identity differ it doesn’t really effect you because you’re only really exposed to the latter.
Best of luck to both of you, I hope everything works out. And my thoughts are with your friend, who must be going through a tough time right now :(