Well, I'm in sales, so pretty much what we dress like is dictated by our customers. If the person looks to whacked out, then they won't do well with us and natural evolution will take over. If a person isn't presentable then it's a issue that would be addressed on the spot.
we have had, in the past, women who are lesbians who dressed more like men and were able to do well. So in the private sector i really don't think it has much of an impact other than in business where your clients dictate how you look.
How ever in the military it does matter.
In Sweden, the military usually have uniforms or a dress code, usually suits, just like any other workplace.
So transvestites don't get to wear high heels in the djungle...

The uniforms are unisex, or rather, they're originally designed for males, and have some custom fit for the females I guess. But there are no skirts, so to speak.
I don't see Gay-in-Army problem to be honest.
The only problem is gay bashing and homofobia, fcuking up the spirit in a group. But that's something that is a problem for the homophobic person, since homosexuality is allowed in our society.
-Hedge
edit: I'm no fan of transexuals personally, and although I don't have problem with transvestites, neither of these two groups would be persons I would spend time with if it was up to me.
The same goes for lesbians.
But I definitely support their rights, however.