They don't usually pass; you're right. But that's the societal change that the gender-affirming movement asks for: that trans people are treated as the gender they see themselves as.
But how can I treat someone "as the gender they see themselves as" when you have already acknowledged that gender isn't a thing, it's just a bunch of stereotypes? What you're actually asking me to do is to treat them as the sex that they are pretending to be. In other words, to collude with them in their delusion.
Adopting stereotypes doesn't make someone male or female, but my argument is that if a male 'passes' as female, then he is a woman; if society applies the stereotypes associated with females to you, then you are a woman. Whether you are a transgender woman or not is based on whether you are actually female or not.
I understand that this is your argument, but I fundamentally disagree with it. You are effectively trying to reduce the meaning of the terms man and woman to a bunch of deeply flawed stereotypes and to divorce them from their biological reality. A woman is a female adult human. No more, no less. And a man is a male adult human. If you aren't willing to accept that, then we may as well dispense with the terms man and woman altogether because your argument renders the words utterly meaningless.
You're right that we should move past these stereotypes, but they're here to stay at the moment. Throughout history and across many different cultures, various stereotypes - various roles, expectations, and norms - have been applied to men and women. Although I am a gender abolitionist - I agree with you that we all have 'individual interests, preferences and personalities' - I doubt these gendered stereotypes will just fade away.
You're contradicting yourself here, I'm afraid. You can't claim to be a "gender abolitionist" and say that you want to move away from the old stereotypes while simultaneously seeking to perpetuate them by arguing that we should recognise gender and gender identity as a thing. The concept of gender emphasises stereotypes, and it doesn't move us away from them at all. And those stereotypes are only here to stay if we collectively choose to make them stay - they are by no means universal or consistent across different cultures. Asking people to accept that the adoption of certain stereotypes "makes you a man" or "makes you a woman" works in a manner that is diametrically opposed to tackling stereotypes. If a man likes wearing dresses and we pretend that this makes him a woman, that merely strengthens the stereotype that dresses are for women. Wouldn't it be much better instead if we were to say that some men like dresses and that dresses can be for them too if they like them? Perhaps if we all did that, then the stereotypes really would begin to fade away over time, and that would be so much better for everybody.
Just to clarify, my point is not that we use stereotypes for a determination of gender, but for a determination of sex instead. What set of stereotypes we then apply to people reflects their gender.
With regard to the first sentence here, no, I fundamentally disagree that we use stereotypes for a determination of sex. Sex is determined by biology, and most of us are easily capable of recognising biological sex regardless of "gender" markers which might be intended to persuade us otherwise. I don't understand your second sentence in this paragraph, it appears to be tautological.
For example, we use a woman's short height, feminine face, and dress to determine that she is female. Given we determine her to be female, we apply feminine stereotypes (stereotypes of women) to her. This means she is a woman. However, it could really be that 'society' was wrong, and that this woman is male.
Again, I don't really know what you're getting at here. A woman cannot be male. I think you are saying that a short trans woman with a feminine face could be mistaken for a woman, and that we would therefore make other assumptions about her because we would mistakenly believe her to be a woman? But that argument is flawed, a)because it's highly unlikely that even a short trans woman would actually be mistaken for a female and b) those of us who reject sex-based stereotypes tend not to make loads of other assumptions about people based on their sex in any case.