Works fine on US servers. Just tested using Polymorph-Pig after reading your post. Also caught a Poultryized chicken around 3-4 hours ago. My other morphed pets are all still morphed as well.
Though I would like to be able to get them to keep the new forms when battling other players. They revert to their original forms during pvp pet battles. Looks like that part was fixed, unless there's an additional step/trick I'm missing?