Yes, you certainly can overwhelm the root system of a newly transplanted tree with too much water. In fact, this is probably just as common (and just as bad) as not supplementing your newly planted trees with enough water in the absence of significant rain.
By saturating the soil (fine textured soils) with too much water, you can create an anaerobic environment for the tree's root system (tree roots need oxygen). By starving your tree's roots of oxygen, the tree's leaves will turn yellow and then fall off - with potential mortality soon following.
For more information on transplanting larger trees, please refer to these publications:
http://www.forestry.iastate.edu/publications/F-359.pdf
http://www.utextension.utk.edu/publications/spfiles/sp572.pdf
Oh yeah, best not to transplant trees during the summer (much better to transplant during fall and early spring).
