Really? The evening gown reference is a little extreame no?
Children should be allowed to be who they are. Why should they have to follow "norms of society" if they live outside of that?
Wearing muddy jeans to a wedding is inappropriate...Not identifying with one's physical gender and dressing to suit themselves is not. (Unless they are instisting on wearing mini-skirts and belly shirts to church)
Just be aware that there are consequences for refusing to follow societal norms. Now, this kid is 4, so no big. If he's 14 and walking around decked out like a princess, he will be mocked. That's just a fact, if you're going to intentionally draw attention to yourself in such a fashion then you'd better be ready to deal with the consequences. Doesn't make it morally right, but it's still reality. So if you're going to raise your children to "be whomever they want to be", they need to realize that if they show up to their first job interview in something society considers abnormal or outlandish, they'll likely be living in your basement for quite some time.
Myself, I have tattoos, but I won't get any that aren't covered by work attire even though I'd love to simply because it would make some of my patients very uncomfortable and probably cause me to lose business.