Yup, its insane.
In ladies toilets, we all have seperate cubicles anyway, so Im not sure why anyone really cares if a m2f transexual uses the ladies toilets.
Ive been in mens toilets, and they have to pee in a trough or urinal. I think it would be better to give guys the same privacy as girls, and then hopefully they wouldnt have to worry about a gay or trans person seeing their cock.