I think the military won't have the difficulties that many think. After all, they already had to make the necessary changes the last time. As far as I could tell, the majority of those changes could be summed up as "just ignore it." I think one of the things I saw was if you wanted to dress as a woman, that was fine, you just followed the 670-1 as applied to female uniforms. But there was a caveat that you couldn't go back and forth. It was one or the other (if I remember correctly).
That said, I'm probably in the minority here that I could care less how somebody wants to dress or what they want to be called. So long as they maintain military discipline and do their jobs. I was around during the "Don't ask/Don't tell" days as well, and there weren't many problems. There were some, to be sure, but there are always SOME problems no matter the situation. There were always people that you knew were gay or lesbian or trans, it just wasn't discussed. Maybe it's because I've worked with some excellent soldiers who were somewhere on the LGBT list that I feel that way, but I just don't care.