Why do K rated transformers deal with high harmonics better than your standard dry type transformers? Looking for theory of operation information here. Also, if you have any information on how I can learn more about transformers, it would be greatly appreciated. (Books, websites, etc.)
Thanks!!

Mike
Try the Square D website under transformers. They give a thumbnail explanation. Basically, there is an electrostatic shield between the primary and secondary windings. The shield is grounded therefore it attenuates some of the common mode noise and source line interference.
There are other sources of information such as the IEEE books available at some local library's, and book stores.
Another help would be your local transformer reps, Square D, Acme and others. Contact them and they will be happy to get you more information.
Hope this helps.

GE has a great adobe acrobat file that describes K-factor very nicely. http://www.geindustrial.com/products/applications/DE-377.pdf