The book actually makes it clear that Buffalo Bill isn’t transgender. Dr. Hannibal Lecter even says that Billy is not a real transsexual, mentioning there are three major centers for trans surgery and that he wouldn’t be surprised if Billy had applied for sex reassignment at one or all of them and been rejected.

There’s also a line from Clarice about how there’s no correlation between being trans and violence, and that trans people are usually very passive: "There's no correlation in the literature between transsexualism and violence. Transsexuals are very passive".

That scene certainly didn't do any favors for the trans community. All that villainizing media kept me in the closet for way too long. I used to hate it. Still, it's a great movie. Now, I like to put the song on when people come over sometimes just to see how they react. ;)