I did it by ear. I was never creative, so I never was good at creating anything original. But I was often able to listen to songs and break apart each instrument and notes, and had tons of fun transposing some of my favorite songs.
Of course, more complex songs with very subtle instruments or phrases were harder to replicate, but I was often able to get it fairly close.
Not surprisingly, playing Rock Band for many years has improved my ability to hear the more subtle instruments/notes, but I don’t do as much midi transposing as I used to.
I’ve not listened to the Rainbow Road midi in a while, so curious if I can pick out mistakes or things I missed now with a bit more experience.