EDIT: Also, does a reaction action take place before whatever you are reacting to?
It actually depends on the specific reaction.
For example, both knowledge and sense motive can be used as reactions to an event, in which case they'd have to happen after the trigger (otherwise everything makes no sense D: )
On the other hand you've got actions like Interpose, which is a Reaction to an attack - which occurs before the attack deals damage). It's kind of a case by case thing.
Normally when a force-field or Shield power is a reaction, it happens with an attack as a trigger, but before the attack resolves.
I was thinking of turning Alternate Form into a reaction action, so I could counter attacks by changing my form into something that is immune or otherwise better against it.
Would that be okay?
Well, Alternate Form is already a Free Action, but upgrading it to a Reaction as well would make it cost an addition 1 Power Point per rank in the power.
On the other hand, you could downgrade it to a standard or full action, with a corresponding decrease in Power Point cost.
EDIT: It goes like this -
Action DurationReaction > Free > Move > Standard > Full
Let's ignore Move for now because you can't modify the time it takes to perform a Power that has a Move component (that's part of your Move for that round)
That makes it
Reaction > Free > Standard > Full
Let's say you want to have a Blast power that's basically a Full action. A Blast normally costs 2 points per rank, but because you're moving your Blast from a Standard action to a Full action it would only cost 1 point per rank (meaning you can afford to make your Blast blasty-er). Making it a Free action on the other hand would make it cost an additional point (3 per rank) and making it a Reaction would make it cost another additional (4 per rank). Of course a power that allows you to kill someone whenever he or she looks at you funny is
kind of overdoing it.