Mindmaster is raising some very good points about all this without being discriminatory. Military Service is not like civilian life. You actually lose a few rights, such as areas of freedom of speech and expression. Remember the Navy soldier who did some manner of protest against the flag and anthem, in uniform? Yeah, big no-no. It's one thing for a civilian to do that - and is completely protected - but it is absolutely against regulations (e.g. forbidden) for a soldier or officer of the Armed Forces to protest in such a manner. She could have even gone to a rally on her own time and in her own clothing - but not in uniform or in formation.
The issue is being reviewed. If it's found (like homosexuals serving in the military) to have no adverse effect on the tactical effectiveness of the military as a combat unit, then there's no issue.
But I will say this. I work with a transperson undergoing hormones. They haven't even gone under the knife yet, but it's already causing problems at work that aren't related to social stigma and bias. You're changing your body. There are bound to be some side effects, and those are bound to affect those that you're working with. In a combat situation, that's not the time for problems - either psychological or physical - to surface.