You're right, by enforcing a dress code it doesn't diminish the chance of violence happening, the kid already came to school dressed in drag once and therefor the sad (but true fact) is that just by doing it once the kid already made himself a target regardless of how he comes dressed to school.
I think that the issue of school aged kids coming out is something that is new. And, educators are unsure of how to deal with it. I am not saying that bullying is right or that it is something that i condone. However, bullying has always gone on in some form or another since before this issue rose to the surface.
I understand that you feel that the kid should be able to come to school dressed however he wants to. But, there has to be a line of what is acceptable for school and what's okay for personal time. At most jobs, if a guy showed up to work in drag, they would ask him to change, and if he refused, then he could get fried. And, truth be told, from a legal standpoint there is nothing that the guy could do about it. If they fired him for being gay, sure, that is wrongful termination right there. But, if they fired him for being in drag, then there is nothing that the guy can do about it. Being gay is a civil right and one that can't warrant termination of employment. However, wanting to dress in drag isn't and can warrant termination. I am not at all saying that I agree with the way things are set up, but that is the way things are.
Furthermore, I do think that it is an awful thing that there are kids in high school who commit suicide due to the fact that they are bullied for being gay. And, that it is a problem that needs to be fixed. But, while you can make rules about what a school deems acceptable on the subject, doesn't mean that a student is going to agree with what their school administration said or think it is right. So, how do you suggest that the problem be solved?
"If you try to shag my husband while I am still alive, I will shove the art of motorcycle maintenance up your rancid little Cu**. That's a good dear"
Tom Stoppard's Rock N Roll