Very interesting how the language we use can shape our view (in this case and many others). Perhaps transgender is a poor word, a loaded word that automatically leads to misunderstanding. I don't know what a better word might be, but I think that such a dry, academic term subconsciously tells us that this is a mental disease. A softer term may go a long way. I think people have accepted the term gay, because it is so nice and non-threatening. It therefore allows one to see the people behind the term, and in my opinion may have possibly contributed to our acceptance of gay people in society. Homosexual on the other hand is cold and clinical, and do you know any gay people who describe themselves as a homosexual? I don't, personally. Maybe transgender should be replaced.
I recall reading that native americans would call transgendered people names like "two spirit", and would celebrate their uniqueness. I agree about the words gay/homosexual. Conversely, the term "straight" implies that the opposite is somehow askew.