Datun I see a rough equivalence with Blanchard's description of hsts and agp - the former got the 'born this way' sympathy whereas the latter were viewed as choosing to be sexual deviants. Either would qualify for the descriptor 'transsexual' if they were presenting as the opposite sex full time; transvestism is more equivalent to Buncean fluidity. It's part-time, not full-time.
DH is a heterosexual-transsexual who admits being sexually motivated. I think we like to kid ourselves that homosexual-transsexuals aren't sexually motivated at all, which doesn't hold up to the slightest scrutiny: the traditional hsts wants to have m/f sex with themselves taking the f role. The heterosexual-transsexual wants f/f sex (usually) again with themselves taking an f role.
The common factor between the two is not wanting to have sex with their own (male) body. Which is the sort of mindset that doesn't develop without the aid of some shitty experiences that do warrant a bit of sympathy.
But the main reason transsexuals and transvestites were viewed so differently is because people intuitively understood that full-time cross-dressing and declarations of not being male were indicators of a whacking great dollop of internalised homophobia in a same-sex-attracted male, whereas transvestites are usually straight and happy about it.
DH is being disingenuous trying to occupy the same conceptual space as old-school homosexual-transsexuals. It's an attempt to garner sympathy, nothing more. It might work on many women, but it doesn't work on those of us who've always been troubled by the practice of inverting the invert (as it were).
Tangentially related, just thinking about the kiddliwinks - has the phrase 'internalised heterophobia' been coined yet? Because I'd lay money that that's a factor among the cohort of young females identifying as gay men; and my ex's agp is very much rooted in his fear of becoming and need to neutralise the thing that hurt him (his father's typically male expression of heterosexual behaviour).