My understanding is that Processing always "compiles" (or more accurately, transliterates) to some other language -- originally Java and now JavaScript as well.
A source-to-source compiler is still a compiler, and it still compiles. Transliteration implies that there is a one-to-one mapping between concepts in the source language and the target language, which is rarely the case. (If so, why bother with another language? Some of the languages which are a more readable CSS may come close, but my understanding is that they still have a few abstractions that don't exist in CSS.)
The main case of transliteration I can think about is assembly language.
Yes, good call, there is a one-to-one mapping between assembly language and machine code.