Hi Alicia,
(this will be an insanely long post, I'm composing offline, my apologies for the length of this message...)
I'm a catholic, too, a neo-catholic even, baptized and confirmed only 2,5 years ago. Catholic and proud. Yes, it is possible... but you do have to take care what you do. The advice other people here have given you is sound. I wouldn't recommend dressing for church. First, you should find out about any glbt catholic support groups, see if there is a church where you can know in advance that you'll be welcome. I'm a member of several groups here in Holland and also in the UK. (Some have been more helpful to me than others, though). Otherwise, coming out is the same as with family, you never really know what they'll say. Don't just come out in front of the whole community at Christmas, please: talk to a priest, see what his reaction is. if he's positive you can ask advice on how to deal with others in the community, as he'll have a better idea of how the people in his parish think.
In my case, I have been very fortunate to get mostly kind reactions in my church, which is also now where I work. I came out here first as a lesbian, the gender thing has only come up in a few conversations, I have some work to do on that... but generally I suspect that is significantly easier for a bio-woman who wants to live as a man. I now wear my everyday "in-between" look to church without problems, I'm even a lector. Some people ask questions, but it's usually pretty easy to explain to them that this is who I am and how I feel comfortable. I do realise that this is as far as i can go here. Unfortunately I think this will not be as easy to achieve for you. Take your time to find out what you can do and what not, where you are welcome, who you can talk to, etc. When I first came out, one priest said "you should know you are a free child of God". Another laughed and said "I already knew that! .... God created a colourful world, just be your wonderful self".
Still, you should prepare for some bad reactions, I have had those, too. I studied in England for a year and at the first church there I was excommunicated at once. I then looked for support groups and throught these wonderful people I found a church where I could be myself.
Generally, the catholic church, at the local level, tends to have the approach that they can't interfere with your private life, but you shouldn't be too much 'in their face'. What that means differs from place to place. Take time to find out.
About fear: I have been afraid of everything and anything most of my life, afraid of people (form of social phobia). This has complicated coming out as catholic, then as lesbian, now as, 'genderqueer'(I'm not sure of that label yet), ... (my family have issues with all these things). Don't let fear control your life. Cassie's mantra is a good one. Here's a prayer that has kept me going for years now, from a book called Metafisica cristiana, by Conny Mendez, in spanish. Here's a paraphrase in English (I tend to address God as Mother instead of Father):
I am not afraid. I will not allow fear in my life. God is Love, and in all of her creation,
I have nothing to fear. I have faith. I want to feel faith.
Thank you, Mother, for you have already heard my prayer.
The phrase "Fear not, I am the Lord, your God" is one of the most frequently repeated lines in the Bible... so when you get bad reactions from people DO NOT LET THEM TAKE AWAY YOUR FAITH!!!! If you accept yourself and know deep in your heart that God loves you as you are, that is the most precious gift in life, a great source of strength for the road ahead of you, AND NOBODY CAN TAKE THAT AWAY FROM YOU!
I wish you all the best.... and now I'll reschedule some of the appointments in the priests diary so I can squeeze myself in... I can't be writing all this to you and not take steps myself to finish that conversation with him, about my own gender-issues.
I hope this helps you,
love
Alex.
