Does this movie confuse transvestites with drag queens?

Near the end of the movie when Bree's sister sorta jokingly offers Bree some outlandish clothes out of her closet, Bree says she's transsexual, not a transvestite.

But wouldn't it have been more accurate if she had said "I'm transsexual (or transgender), not a drag queen."? It's drag queens that like to dress up in exaggeratedly girly clothes, the tackier the better, in bright colors with sparkles and sequins and feather boas . . . right? Transvestites are just straight men who get off on wearing women's clothes, mostly underwear. If they put on a dress, it's probably just gonna be a regular dress. Not something outrageous.

In any other movie, a mistake like that . . . if it is a mistake . . . might not stand out so much. But in a movie like this, it would seem a lot more important to get those details correct.

If I'm mistaken, somebody please enlighten me.