I don't really know how to articulate this.
To me it seems more about the employee's experience rather than the paying customers'. As a child I wouldn't have been comfortable with a man in a dress, sporting facial hair and wearing make up (and/or a wig). I didn't like pantomime dames either. I don't know why, maybe I was a prejudiced child? I came from a very liberal home and understood gay acceptance from an early age (as opposed to classmates in the mid 80s, you can imagine the taunts).
The man in the video would've triggered an uneasiness, probably connected to stranger danger and so on (though we were never specifically taught to fear men in dresses/wearing make up). Honestly from an early age I think we connected it to being fetishy, especially when sported by a bog-standard bloke from your area (who didn't remotely pass as female) as opposed to some refined theatrical performer or pop star.
I'm also on the autistic spectrum so maybe that has something to do with processing it. I still don't feel 100% at ease around men in female costume to this day even though my brain is reassuring me.
I'm conflicted as at the end of the day it is only a costume or a uniform. Are there any other examples of male employees dressing as female characters in the Disney parks? Other than the costumes with a giant head like Minnie Mouse etc 😁 I guess female employees could dress as male characters (I'm thinking along the lines of Robin Hood). On the other hand I can imagine guests being confused and disappointed if one of the main 'macho' male characters, a Disney prince/superhero/villain with no cartoon 'head' to conceal the person's face was worn by a woman. People go to have their photos taken and immerse themselves in the experience, it's probably not the same if the character doesn't reflect the canon.
Dress however you want in your personal life but it seems like the employee has deliberately set out to be subversive and stand out, revelling in the attention. Also being connected to the (predominantly) little girls' dress up boutique, not wandering around the park in a general role or in a parade. They'd have had to push for this and I doubt their employers were keen in the first instance but relented due to fear of TRAs and repercussions across social media for not being sufficiently liberal (I'm liberal myself though not far left). Pure speculation of course but generally you go to work and your wear the accepted uniform. You don't start badgering to wear your preference unless it concerns adjustments for disability, religious or plus size requirements.
The costumes are based on Disney princesses (?). Disney princesses don't typically have male facial hair, gaudy make up and adult male physique. This person knows it's not really de rigeur and that many customers (perhaps immediate colleagues too) may feel uncomfortable about that. Why does this have to be normalized (because of this individual's demands) and children's and parents' boundaries broken down? Why does this individual want to elevate their wants and needs while at work? Disney have already tried to promote gender and sexuality themes in some of their more recent output and it hasn't been well received since it's aimed at children. I'm not just talking about conservatives either - parents in the centre politically aren't necessarily keen either.
I don't think it's the same as dads and male relatives playing fancy dress with kids they're related to. You don't typically see men walking around in society wearing elaborate dresses, facial hair and make up during the day (unless they're on their way to DQST or a Pride parade 🤭). You wouldn't necessarily trust the intentions if such a person approached your small child in the street for a chat. They're a stranger after all and dressed subversively. I guess this comes back to societal norms and the potential for it being AGP rather than innocent.