I think Caitlin is spot on in identifying the delicate nature of the problem at it presently exists, a "damned if you do, damned if you don't" situation.
On one hand, we all know that we're not crazy. We're just people with the same loves, hopes, insecurities, and wishes as everyone without gender struggles; we're simply a variation of the human condition. Most of us live happy and productive lives before, during, and after transition (despite how media may portray us). Our condition is not a form of psychopathology.
That said, any foray into an undergraduate abnormal psychology course teaches that mental disorders are construed along the four D's: distressing (to the client), deviant (to society), dysfunctional (causing disruptions in one's everyday life), and dangerous. Of those, deviance is the shakiest point to argue in our case, as many behaviors can be considered culturally deviant without any form of pathology attached. If deviance is defined simply as "not the norm for one's culture," then female construction workers would be deviant. As I said in the paragraph above, we're simply a variation of the normal human condition. But to varying degrees, the other three D's fit us. GID (or gender incongruence as the proposed changes call it) can be very distressing to the sufferer, dysfunctional when it prevents us from our normal routines or functioning in society, and dangerous if it leads to suicidal ideation.
So now the argument is whether we want to view our condition under the disease model (as a diagnosable psychopathology) or, as the APA did for homosexuality in 1973, simply normal. Many parts of the western world with socialized medicine can move to a normality model with little disruption to the current system so long as government and medical practitioners still accept transsexualism as a real condition with a real treatment regime that's covered by national insurance. But in the US, where we already fight against insurance companies who refuse any payment whatsoever for any issue related to transsexualism, the normality model would be a HUGE step backward (and let's face it--in the current political climate, we're likely going to be slaves to the private insurance system into the far distant future). No diagnosis by the medical community means no treatment, period. We need to be labeled and we need to be pathologized, then we need to start screaming for insurance parity, probably accompanied by some bloodshed and mass sensationalism, in order to have any hopes of turning insurance companies' ears to our needs rather than to their executives' bonuses and posh retreats.
It really is a tricky situation with no easy answer...