David Bell said:
WHAT ARE WE TALKING ABOUT? What is PE and KE? But more to the point: What is the transfer mechanism between KE and PE? How does energy change/convert between the energy of motion (KE) and the energy of position (PE)?
What are PE and KE? They are, to some extent, just bookkeeping entries. They are computed numeric quantities that are a convenient way of summarizing one aspect of a physical system. You might imagine them as analogous to the way a FICA credit score summarizes your credit report.
Kinetic energy is the quantity computed by ##KE = \frac{1}{2}mv^2##. It is the energy that a body possesses by virtue of its motion. For an object propelled by a constant force, it turns out to be equal to the force propelling the object multiplied by the distance (in that same direction) over which that force acts. Force multiplied by distance is called "work". The fact that the change in kinetic energy is equal to work done is the "work energy theorem".
Some forces (gravity, electrostatic repulsion, ideal springs, compressed air) are "conservative". If you move an object against these forces and then allow it to rebound, the force on the forward stroke and the force on the return stroke will be equal and opposite. More technically, the work done by a conservative force on the forward stroke will be equal to the work done on the return stroke, even when the forward path and the return path are not identical. All that matters is the starting and ending positions, not the path by which they are reached.
Since the work done (and, hence, the kinetic energy produced) going between two points is always the same, we can give this quantity a name, "potential energy". We pick an arbitrary fixed ending point and make "potential energy" a function of the starting point alone. Potential energy is then the kinetic energy that an object would gain when moving from the given starting point to the agreed upon reference point when subject to the conservative force alone.
It is then no surprise that potential energy transfers to kinetic energy. It does so by definition. The mechanism is nothing more than the application of whatever conservative force one is talking about.