These folks are delusional and self destructive. You don't treat the illness by pandering to the delusion.
To induce the defect, one simply has to introduce a small amount of estrogen to a mammalian male fetus right before the testes develop the ability to produce androgens principally testosterone (if I recall correctly, around the 4 month mark of the pregnancy). The estrogen blocks the androgens from reaching the brain.
Every mammalian ovum is a blueprint for a female and the brain stays female until it gets the chemical message from the testes that the fetal body is male. Since estrogen is a testosterone inhibiter, if its present in the male fetus it can block that chemical message. When that happens, a male is usually born with a stria terminalis that is female sized (about two thirds smaller than a males) and a hypothalamus lacking the extra neuron super-clusters present in men but not woman.
Thats why transsexual behavior in children occurs right around the time that children begin presenting inherently distinct male and female gender differences.
Interestly, these differences in the brain dont occur in gay men: their stria terminalis and hypothalamus are the same as straight men. But the stria terminalis and hypothalamus in a transgender is all but indistinguishable from a womans.
I think your statement about being delusional can be applied to non-transgendered males who dont present their female behavior until after sexual puberty. Personally, I think those people are fetishists, whove learned the behavior as a sex ritual, much the same way as people who are into water sports or bondage.