Not completelly automatically.
But to rename all files you are dragging at once, you can use operation mask:
https://winscp.net/eng/docs/operation_mask

Was wondering if there is any way to setup an automated process to change file extensions when dragging and dropping files in commander mode?

Example:
Dragging and dropping file example.ffd and have winscp or script change the extension to example.txt

Thanks for any help you can off.

:?