[0] https://doc.rust-lang.org/1.73.0/std/mem/fn.transmute.html#e...
1. A reference cannot outlive its referent
2. A mutable reference cannot be aliased
https://doc.rust-lang.org/nomicon/references.html
Therefore, any use of transmute that extends a lifetime is UB if it causes the reference to outlive the referent. And because it's UB, the backend is going to assume the invariant holds universally and will optimize accordingly.
The Nomicon also has a section on generating lifetimes via transmute, which it calls "unbounded lifetimes": https://doc.rust-lang.org/nomicon/unbounded-lifetimes.html
By itself, a transmute of a currently-live reference cannot make it outlive its referent, in the sense used by the Rustonomicon. As it says later [0], a reference is alive until the point when it is last used, and no further.
Thus, with unsafe code, the lifetime of a reference can extend past the point when it stops being alive. As a consequence, extending the lifetime can never cause UB by itself: only using the reference after it has been invalidated can cause language-level UB.
Since language-level UB is based on liveness rather than lifetime, the compiler must assume that a reference passed to a function is valid even after it returns, up until the caller invalidates the reference by performing an operation incompatible with it remaining alive.
[0] https://doc.rust-lang.org/nomicon/lifetimes.html#the-area-co...
When a reference is 'used' is much broader than you might expect; https://github.com/rust-lang/rust/issues/52898 is a SIGILL from merely creating a null reference, never 'using' it.