You have askes debating wherever Danny can see the thestrals or not, and whatever it depends on his mental exeptencse of his own death. But non debating if DRACO will be able to see them. Because honestly, in au where draco knows about Danny's secret, will his transformation even register as "dying" to draco?
(re: this AU (for post links) but specifically this post and this variation of the post)
Truthfully, I'm not sure Danny sees his own transformation as dying (the initial one being debatable because that one hurt), so I'm not sure Draco would see it as dying as opposed to something like transfiguration. Things changing appearance to him are a little more par for the course than they were to pre-canon Danny; Draco grew up in a world where that was normal. It would probably feel more like Danny is masquerading as a ghost than that he specifically is a ghost when he's so different from the ghosts with which Draco is familiar. This might change if he does some extensive study of Danny in his Phantom form, but it's probably hard for either of them to think of Danny as dead when he's sitting there and talking about it.
Consequently, I personally would go the route of seeing Danny transform would not be enough to allow Draco to see thestrals. He'd need to experience a more permanent death. (Now I'm wondering if people seeing someone die and be revived would count, but that's off topic.) The argument for the opposite could be made if someone wanted to write it into a fic, though. It could even become one of the main reasons Draco accepts that Danny is actually dead if that's the standpoint the author is taking.
