My state return transmitted to Intuit at 8:03PM, but it did not transmit to the state until 1AM. Why was it delayed and will I be penalized?

TT does not actually send tax returns. Rather, they sit on the TT servers, and the government comes and periodically pulls them.

So will I be penalized since it was not pulled until after midnight?

No, not necessarily. And there is no penalty anyway if you are getting a refund.

I submitted an electronic payment at the time I transmitted. Sounds like I am not on solid ground and will have to wait for the state to accept the return to see what the final outcome will be.

Your tax filing is based on the Submission Time, just as the Post Office will postmark your mailing correctly if you put it in the mail slot before midnight.