Thanks Melissa and Lydia.
I took another look at the letter and there are only references to being born as a male and now are a female and nother thing to do with the terms transsexual or transgender. I was born in California, so I don't have any worries in regards to changing my BC. The only possibility I can foresee there being problems with is getting my temporary 1-year passport as female. I suppose if I follow the rules very carefully it shouldn't be a problem as that's how I've done everything else (including my DL) without a problem.