Not knowing more of the medical/psychiatric details of this case, I cannot - and therefore will not - speak to that aspect of it. Looking at what details were published, however, I note that one indication of Tim/Kim's transexual orientation is that s/he played with Barbies.... now, I didn't like Barbies, and was much more interested in playing with Legos, Lincoln logs, and toy cars - that did not, however, indicate that I was male instead of female, nor have I ever doubted that. Nor did William, in "William Wants a Doll", a song by Marlo Thomas, want a doll because of gender identity problems - he wanted to learn to be a daddy.
I had an issue with that, too.
I'm old enough that when I was a boy, GI Joe wasn't a comic book character and dozens of little action figures. He was a 12-inch "action figure" (doll by any real definition) with "KungFu Grip" and various vehicles and playsets (jeeps, submarines, forts, science labs, and more) available. He had a crew cut (the hair would likely fall off if you got it wet), beard and scar. (I saw pictures in catalogs of black GI Joes and GI Joes with hair other than a non-descript blackish/brownish -- but all I saw in the stores was the ordinary white male with blackish/brownish hair.) And... I even had stuffed critters that I was rather fond of.
GI Joe was pretty darn near the size of Barbie, in other words. With lots of more masculine but similar accessories.
I don't think playing with GI Joe was feminine, any more than playing house, school, or any other games we played with neighborhood kids, boys & girls, were. Or that my 1-year old niece liking to play with tools and "fix" her toys indicates that she really wants to be a boy. (Hell -- my wife has more tools than I do!)
I don't think that simply playing with dolls suggests some gender-identity issue. I doubt that this was the sole criteria and I hope it wasn't a primary criteria in this case... But this whole case disturbs and frightens me. As I said -- I have problems with treating gender identity issues with hormones & surgery to begin with; among other things, it's against my religion. (Anybody know if gender identity disorder is actually part of the DSM yet?) But I have even greater worries when we start messing around with biology and maturation... We never seem to have really good results when we try to stop or change those biological processes.