Alternate Stance

[STM1993]

So he will transform into another character who will have the healing state in his fire frames.
...
So I don't get why he will take damage at all.

This is exactly the problem. Damage is applied when the itr connects, it doesn't matter what frame the character is sent to.

If the fire attack directly hits the transformed character and send him into the fire frames, the transformed character will still take damage. It doesn't matter if you put a heal like state 1700 or use a John heal ball or even make him drink a hidden milk - he will take damage, and he will die if his HP is not at least higher than the damage, and he will permanently lose red HP based equal to 33% of the damage taken. The only difference is that he heals dark hp(67% of the damage over time) AFTER the damage is taken.

Simple experiment: Set John's burning frames to have state 1700 instead of state 18 and any other changes you like. Go to Battle Mode. Have Firen throw any kind of fire attack at John. Watch as John's HP goes down before it goes up(but never recovering to 500hp), and John will still be killed by fire. John is not immune to fire, he is merely a bit harder to kill with fire when he has higher HP than the damage taken.

If you want proper immunity, you have to opoint something else to take the damage. Simply transforming and modifying the burning frames won't work.