I think there may be a certain amount of Daily Mail bias and selective reporting here, to put it mildly. Yes, they took an unusual position but I am guessing that a lot of the thinking behind it and the way it worked day to day have been left out to may her look crazy to simplify the story for DM readers.
I vaguely knew Beck Laxton at university and she has a long history of challenging the status quo and questioning people's assumptions, but she is (or was back then) an intelligent, ethically-driven person, not someone who would dress a boy up in girls' clothes because she actually wanted a girl.
I think her biggest error of judgment might be agreeing to appear in the DM and expected to get a fair hearing. Now that is mad...