I would use the woderboard. It can be cut with a utility knife (just score one side and snap). Also, just to be safe, you can spread thinset adhesive and just screw it down on top of the existing floor no problem. As Buzz mentioned you can get transition strips in wood and in marble in various sizes and profiles. Also, look at the brass or chrome 1/8" metal edge that goes down under the tile, that is good for carpet as long as the carpet is not too much lower than the new tile. Also depending on the britleness of the tile and the shapes of any cuts you might want to either buy one of the $100 wet saws at HD or rent a saw.
Also, the
John Bridge Forum was listed here a while ago. Plenty of good info there.