I have been reading about this 'Tor' and even saw it when i did an 'apt-cache search tor' and its a program that can easily be downloaded and installed, or so I believe it is... but does it really work?

Get the "Tor Bundle"

https://www.torproject.org/projects/torbrowser.html.en

Be aware:

Tor is full of drug merchants
Tor is full of real/fake assassins
Tor is full of child pornographers

IMO, there is nothing worthwhile to be had on tor.

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I have gotten transmission to work but I am trying to find an app to block my IP address, like peerblock on Windows etc... any advice?

I personally don't like Tor, it lacks end-to-end encryption, and some of the nodes are run by the govn't. It's true that it does increase anonymity, but make sure you understand what it does and does not do. If your local network is not secure, Tor will NOT help you. I personally prefer freenet, but speed is an issue with it.

There is no way you can block you IP address, you have to have an IP address, the above programs only make it harder to detect your true IP address.

Disclaimer: These tools can be used for many purposes, including bad ones, as mentioned above. None of these tools is 100% secure, so be very aware of this. Don't do illegal stuff.