It is very appropriate to be in costume at TFcon.
Encouraged is more like it. There are even some attendees who enjoy staying in costume for most of the convention. Although, that's really up to you.
TFcon isn't just a Transformers flea market. It is certainly a great place to show off your costume and meet other fans and guests. As well as participate in activities like panels, customizing class, costume contest, art contests, Faction Feud trivia game, bar night(18+), etc.
Only thing I would warn against is that, at least from what I've seen, most costumers usually stay outside the dealer room most of the time just because it can get pretty crowded in there sometimes. And you obviously don't want to potentially damage your costume with people bumping into you. Plus, ya know, you might be in other peoples way especially if you're in a big boxy costume.