I've heard it said on multiple occasions that the word Butterfly was originally Flutterby, but that it was either misread or mispronounced and somehow ended up being recorded as Butterfly instead.
I did a quick google and found the following for the word's etymology:
Old English, from butter + fly; perhaps from the cream or yellow colour of common species, or from an old belief that the insects stole butter.
I did not find reference to the term Flutterby in any dictionary definitions, but did read this article which addresses the Flutterby word and states that the author is not aware of any such origin, and dismisses the idea as nonsense.
Is it likely or at least possible that the word Butterfly did in fact start as some variant or analogue of Flutterby?
Some instances of the transposition of syllables [...] are pillercat for caterpiller and flutterby for butterfly in the usage of children.
However, the word for butterfly is not derived from that usage. Butterfly comes from the Old English "buttorfleoge", according to etymonline.com:
butterfly (n.): Old English buttorfleoge, evidently butter (n.) + fly (n.), but of obscure signification. Perhaps based on the old notion that the insects (or witches disguised as butterflies) consume butter or milk that is left uncovered. Or, less creatively, simply because the pale yellow color of many species' wings suggests the color of butter.
Why is a butterfly called a butterfly in Britain? According to the Oxford English Dictionary, the reason is unknown! However, two possible derivations are offered: (1) from the Anglo-Saxon butterfleoge (literally butterfly) so called after the yellow species, and/or from the Old Dutch boterschijte (butter-shit) from the colour of the excretion of Cabbage White!
Does the word “butterfly” stem from an erroneous transcription of “flutterby”? Is it likely or at least possible that the word Butterfly did in fact start as some variant or analogue of Flutterby?
Not really. The newsletter and Proceedings of the Linnean Society of London, Volumes 15-17 suggested two possible derivations and none had your claim. Books and references suggest that butterfly stem from butterfleoge; the rest is unknown.
To show flutterby is the origin of butterfly, it would need to precede it in time. With the OED pointing to Old English versions of butterfly, and Shakespeare using it several times, perhaps best known in King Lear Act 5 Scene 3