Your example hints at a man who dresses like a woman (but usually not transitioning or being uncomfortable with their (day-to-day) manhood), so cross-dresser (or drag queen if it is really over the top, well, drag queenish, which the ballgown sort of implies).
'Tranny' being derogatory isn't really new-speak. The only recent shift I know of is that men who dress up like (feminine) women tend to prefer 'cross-dresser' over 'transvestite' nowadays. The problem with 'tranny' in this context is also that it now mostly refers to transgender people (in a derogatory way) rather than cross-dressers.
Thanks. Have to say cross dresser fits much better given the context. I can no longer edit my post and will have to take the heat instead. Lesson learned.
'Tranny' being derogatory isn't really new-speak. The only recent shift I know of is that men who dress up like (feminine) women tend to prefer 'cross-dresser' over 'transvestite' nowadays. The problem with 'tranny' in this context is also that it now mostly refers to transgender people (in a derogatory way) rather than cross-dressers.