Not to get to far afield, but Blanchard is frequently understood superficially. A major early finding of his research was that the majority of men seeking sex changes were heterosexual. That was a surprise because previously, being homosexuality was thought to be a requirement and many men who went to sex change clinics falsified their sexuality in order to obtain the treatment. That observation continues to be relevant today. Well over 50%, perhaps as high as 75%+ of adult men seeking to transition are primarily heterosexual.
Blanchard also theorized that it was the transposing of sexual desire onto one's self that made one truly transsexual, i.e. that was the commonality between the Izzards and the Bergdorfs of the world, which is really just a restatement of your observation. What's more being homosexual was in fact often a conflating factor, and if internal homophobia could be addressed, often the dysphoria caused by the desire to be the opposite sex would subside or be made manageable. So, if anything heterosexual AGPs were often the more stable transsexual identity with more satisfactory outcomes from their treatment.
Far from being 'debunked' Blanchard's observations have been, if anything, largely confirmed. For example the high correlation between porn addiction and developing 'gender dysphoria', especially when the addiction comes with with a preference for lesbian porn and is co-morbid with psychiatric conditions that result in compulsive or intrusive thoughts, or literalistic thinking, like autism. And the above noted ratio between heterosexuals and homosexuals seeking to transition.
The reason for the vehement repudiation of Blanchard and Baily in the trans community is purely ideological. That the desire to transition is the result of an out-of-control fetish and not some innate immutable identity (like homosexuality) is politically problematic, and many find it intolerable to conceive of themselves as not being in some way the thing they most want to be: female.