Though I'm certainly not the first person to tackle this subject, and likely not the most educated, I believe I've come upon a milestone that may provide insights to some more educated in psychology, sociology, and game culture.
While it's easy to associate those who primarily use avatars of the opposite gender with transsexual tendencies, there is a fallacy in assuming that this is always, or even often the case. The misconception is in the association of an avatar or custom character with the person who controls it.
This association could likely stick if the person commits to role play. For most people who stick to cross gendered avatars and avoid role playing, the argument is the preference of aesthetic, in what they'll be staring at for the next ten to fifty hours of gameplay.
The difference is not in a meter of one's gender identity, but in the player's comfortable level of immersion. Those who wish to truely immerse themselves conform their game avatar to their ego's image. Those who wish to externally experience the game's story may choose to either use a protagonist with no identity that conforms to their aesthetic pleasure.
There are many others likely sociological causes and effects, and I'd like to hear other's thoughts on them.