Genitals do not make the gender. Saying someone must have, or must not have certain parts in order to fit into a certain category, is a really bad idea. If being transgender was just about getting genitals rearranged, then much of these forums would not be here.
I personally don't like the term 'she-male', because it is indeed about the porn industry. Not to say I don't like porn, I love porn like any other 20-something-technophile.
On top of it all, there are some people that do not sit at the binary ends of the scale. I personally am androgynous. Some androgynous folks identify as neither male, nor female. Should they be expected to remove all sexual parts to fit the role they are? My form of androgyny is that I view myself as both. Should I get the extra parts added on to fit my role?
I think this story is fascinating though. I have not seen the show, but I would like to. I was worried that it would be someone looking for their 15 minutes of fame, exploiting themselves and their child. But it sounds like that is not the case at all. Bringing awareness to the folks that are not "normal gendered" is a good thing, especially if it's brought in a positive light. TS and Gender Identity is a very confusing topic, to the extent that usually ourselves are somewhat confused on this site. I am constantly learning more about other folks, as I previously only had my personal experience to base my opinions on. Being able to see more has helped me a lot.
It makes me sad that there were members of the TS community that did not support him and his situation. We should embrace things that are not usual, because we aren't exactly usual ourselves. We should not be prejudiced or judgmental, if we don't want people treating us like that. In a way, it reminds me of how many times different minority groups will be prejudiced against each other, when in truth they should be allies. We should support members of our community, even if they seem a little bit 'different'. The community should be inclusive, not exclusive.
I am happy to say though, that this particular community at Susan's is one of the most inclusive and accepting communities I have seen regarding TS and androgyny.