Thanks for posting that, Hulk - it was very interesting.
It's a bit of a difficult one, isn't it. Part of me agrees with the corrective therapist (Zucker) that to allow the transgender behaviour is to actually encourage something that might not be permanent. On the other hand Ehrensaft's encouraging approach seems far kinder in some ways. I was going to say laissez-faire - but it is more than laissez-faire, it is allowing and actively supporting a very young child living as the opposite sex.
Of course sexism comes into play here. Anti-male sexism. It is so much easier to deal with an issue like this when the child is a girl. The 'tom-boy' is a cultural norm and is totally accepted. A girl spending her entire childhood in boys' clothing and playing with boys' toys is not really seen as a problem. For most girls who do that it is just a phase, for some it isn't. But they and their families are, for the most part, allowed to go through it without any handwringing and therapy needed. For a reasonable chunk of my childhood (7 to 9 I think) I wanted to be Steve McQueen when I grew up (I would have settled for Clint Eastwood too, but really I wanted to be Steve) - my mum responded by buying me a sweater that I thought looked like his 'Great Escape' get up. Hell I even used to put a pair of socks in my pants to give myself a bulge - I was as happy as a pig in shit. But it was a phase, and it passed. Well actually it didn't - I don't do the sock thing anymore but I'd still like to be Steve McQueen but you can't have everything, hey?
It's the boys who want to wear dresses and ribbons in their hair that our society finds unacceptable. Why did the second kid in the article have to be called she and feminise his name - why couldn't the parents be OK with him being a boy AND wearing a dress? Because he would have been picked on, because society teaches up that men who want to be feminine are unwell or perverted. Women who want to be masculine are fine! Who wouldn't want to be masculine? And how could a woman get a sexual thrill from being masculine. But a man - he gets a sexual thrill from being feminine, an unhealthy sexual thrill! Bollox! There's no bloody difference between me wanting to be Steve McQueen and Ed Wood wearing a cashmere jumper - just that the latter is seen as perverted and the former is not.
So to answer your questions - if I had a boy who wanted to be feminine to any extent I would, I hope, indulge it but not to the point where I allowed him to BE a girl. That's a choice for adulthood. If I had a girl who wanted to be masculine I would allow that in exactly the same way as I was allowed to express that as a kid.