[sciurius]

I'm trying to visualise how this should work.

Assume you're playing a song in the key of D, with chords e.g. D A G, capo on 2. Then on the 3rd repetition you want to shift key to E, with chords D A G, capo on 4?

If you recapo, you play the same chords even though they sound higher.

Otherwise, if you are one of the musicians that play without capo (keyboard, bass, ...) you would like the chords to be transposed.