You can change the spatial reference of a feature class, however it must be inside of a feature dataset. Use IGeoDatasetSchemaEdit2::AlterSpatialReference to change the spatial reference of the feature dataset. This will change the spatial reference of any feature classes inside the feature dataset. As Alex mentioned, this will not project the features inside the feature class. If you need to do that, then you will need to loop through all of the features and project the geometries. I don't know that there's any way to change the spatial reference of a standalone feature class.