I think both of you are probably right.

Children go through phases, some come to an end, and some do not.  If they didn't, we would have far too many princesses, firemen, and cowboys.

Wente had a pretty good op-ed piece on the subject not long ago.  My own view is that pre-pubescent children haven't the intellectual or emotional capacity to know for certain what gender they want to be, any more than they can make an informed decision as to what they want to be when they grow up.

If a child embraces the clothing and mannerisms of the opposite gender, let them self-express all they like.  But stay away from drugs or other courses of treatment that might be irreversible should the behaviour turn out to be a phase.