Well, a transvestite is someone who simply wears the same clothing and/or adopts similar characteristics as the opposite gender while still being suitably comfortable in the gender they were born into. The only real time when gender lines can be blurred is when it involves androgny, feeling gender queer or a transsexual in the process of transitioning into the physical gender that is congruent with their mental gender identity.
So yes, that drag queen you drunkenly made out with that one time? Totally and unabashedly gay.