Being transgender in public means being to use the restroom you identify with, not the sexual organs you have. Imagine a woman in a mans rest room just because she happens to have male genitalia. That's sure not "conforming".
The problem here I think is that in school (and well, everywhere), is that people are very uncomfortable with it. I think there is a legitimate, non-bigoted side to that as well. My concern is using, say, a public restroom and having a guy pretending to be a transgendered woman comes in just to get his rocks off poking and peeking around. How do we know they are trans? There are a lot of cases where it won't be easily possible to discern that at all and it makes me very uncomfortable. If I knew they were legitimately trans, I wouldn't mind at all, but there is so much room for abuse here - And there will be abuse.
Trans woman:
Creepy sex pervert:
Transgender individuals generally do not start using the bathroom of their identified gender until they "pass" - i.e., once society begins to see them as their identified gender as opposed to the gender they were assigned at birth. So the difference between "creepy sex pervert" and "actual transgender individual" will be pretty obvious. You will never notice the transgender individual, and you will immediately notice the creepy sex pervert.
I understand that society is uncomfortable with this right now. But it's better to protect the minority of transgender individuals who are often invisible to society, than to ensure that the vast majority of the rest of the world is not uncomfortable. The discomfort that the rest of the world experiences can be unlearned, and people can grow to become more accepting with the next decade or two. But the discomfort that transgender individuals already experience from the way society views them is not something that can just "go away."
