Honestly, in the modern day world this is becoming more accepting. Do I accept this personally? Absolutely NOT, as the grandfather had stated it's the parents fault. The parents could have told the little boy that being a girl is much better, etc... And got into his head at a young age. Parenting skills play a big role in this boy's life and it seems as if he will live a long twisted life now because of such a young decision.
I myself would not accept this, i would tell my boy to straighten up and that he has no idea what he is talking about. Dress up at a young age is alright, but when you make it a everyday thing it becomes creepy, and what the parents have done is let this continue and become a part of his life style.
Sure, when I was young I can vouch I have 4 sisters, and they only have one brother, ME! So of course they had to dress brother up and fuck with him but hey I turned out alright, theres no thong in this pants. I'm proud to be a man, so thats where it makes you realize that it is even more of the parents fault! But my dad made a man out of me, made me ride motorcycles, shaved my head, took me fishing, and beat my ass with the belt when i got out of control.