Hormones do seem to change sexual orientation by very varying degrees. From zero change to a complete reversal, from what I've read. I'm not an expert at all, but it seems logical to me. After all, some studies do indicate that sexual orientation is related to hormones.
I'm not sure how widely accepted that was, but I remember reading about a study that said that whilst transgendered individuals seemed to be made more likely to appear by a surplus of cross-sex hormones in the womb at some stages of development, homosexuals seemed to be made more likely to appear by a surplus of same sex hormones at that time. In a very unscientific way, I could interpret it as (for born men) "transsexuals were made addicted to female hormones and thus strive for them; homosexuals were made addicted to a lot of male hormones and thus want more and more".
In the light of this apparent link between hormones and sexual orientation, no matter how good and widely accepted that precise hypothesis is, I think it's definitely not irrational to think that a change in sex hormone levels would affect sexual orientation.
Part of it could be a story of pheromones. I'm not an expert, but reproductively-wise, I find it evolutionarily advantageous that females would be more affected by male pheromones and vice versa. After all, there are more females than males who are attracted to males, and it's commonly regarded as normal, since sex is primarily for reproduction to begin with.
And hormones are the only way I see for the body to vehiculate this "react to X pheromone" message. So by taking estradiol, we would make ourselves more receptive to male pheromones, and less to female pheromones, which could, if there is a psychological predisposition of some sort, turn into a change in sexual orientation.
This raises a question: why does it change a lot in some, a little in others and not at all in the rest? Well, attraction, sexual as well as emotional, is only partly affected by pheromones. Even purely physical attraction is probably affected more by looks and behaviour than pheromones. So if someone already had a definite attraction for one gender or the other driven by another factor, a change in the perception of pheromones might be hardly noticeable.
It could also be a "side effect" of the psychological effects experienced on HRT (which also vary a lot). Quite a few report that the way they experience their emotions changed, that they don't interact with others the same way as before. An example might be someone who used to feel more aggressive with things, who would be a leader, and who began feeling more delicate, and who began to feel the need to be protected rather than the urge to protect. Well, that person might be more attracted to men due to the commonly spread idea we have of them as being strong, reliable, protective, etc. which is not all true but not all false either.
However, we can't put it all on the back of hormones. There might be people who were always attracted to men but, consciously or not, repressed this attraction, either through some sort of internalised homophobia or just because they weren't interested in seeing men as men (men-men relationships differ a lot from men-women relationships, right?) And then, when they got closer to living as women, and accepted their real self, "allowed themselves" or "rediscovered" that attraction... Or something.
