Okay so my memory is a little fuzzy but when I was a little kid I saw an episode of an anime where the main character had an arm that transformed. I believe they called the arms an avatar or something of that sort. The arm had a second transformation that made it more powerful, and in the episode I see him win a battle. It was clearly an action anime and every time I see Chad from Bleach I get reminded of it. This was years before Bleach was even a manga so its not that.
Actually, I think it might be this one called S-Cry-Ed. Anyways, if you need help finding an anime you should post it on the Anime Recommendations Thread instead of making a whole new one. I bumped it up for you.