I think you're both partly right. Culturally it's just completely different to the West. Like the other reply said trannies are accepted in the entertainment world, but they're not going to go to work crossdressing at a corporate office unless the boss is weirdly tolerant, and even then nobody else is expected to agree with their delusions. Nobody is going to attack you for saying Matsuko Deluxe is a fat man in drag. I mean, yeah? (the wikipedia article calls him a transvestite, but I've never seen him acting like anything but a woman and fans treat him that way)

Even Thailand is kinda based for ruling against gay/trans marriage recently, despite all the lady boys.