I think it's interesting that many assume that it would be better emotionally for a boy who *wants* to dress in a "girl" costume to be forbidden from doing so in order to avoid the kid being made fun of. I would think the opposite--that there's no way to forbid this sort of thing in a boy who really, really wants to wear the costume without making him feel shamed or bad or weird because he likes "girl" things. And isn't that feeling much worse coming from one's own *parents* than from random strangers at WDW? (Not that I really believe that a 3 year old boy in a princess costume would find much hostility at WDW.)
And while most boys who want to wear a princess costume at age 3 aren't going to be gay/transgender as adults, a few of them are. Is that really the message you want to begin sending to the kid--that you think they should police their behavior/expression/appearance based on other people's narrow view of what a boy or girl should be? (And in my own experience, sometimes when parents say this kind of thing about "protecting" their child in regard to their gender expression or sexuality it's not really about the child at all--it's about the parent's own discomfort or embarrassment. I think it is really, really obvious that that is the case for many on this thread and I feel bad for the gay/trans kids who have to deal with this kind of thing--being called "weird" by their own parents.

But that is generally how it is for many trans/gay kids and adults--you can't count on your family any more than the rest of the world to treat you with dignity and respect. I would think at least though that most decent parents might want to ask themselves "what if my kid *is* gay/trans? how will they feel remembering how I called them weird, forbid them from being themselves, etc?"--if you give even two ****s about your kid's emotional wellbeing that is.)
I also think the idea that it's just obvious that pink princess costumes are inherently for girls is

. Funny how pink used to obviously be for boys! (
http://en.wikipedia.org/wiki/Pink) Hey, maybe for the little boy in question this isn't about gender at all, but about time period--maybe he's trying to be a boy circa the early 1900s when, so far as I understand, baby and toddler boys also routinely wore dresses!