On a semi unrelated note, I do think kids know if they're the wrong gender/gay at young ages.
A friend of mine has a son, and he is gay. He knew at a young age (and it was actually pretty obvious from an outside perspective). However, I don't know how to react/advise someone who wants gender reassignment (etc) surgery at a young age. But than again, I don't know what it's like to feel like you're in the wrong body growing up. I mean hell, I do know what it's like to feel embarrassed (maybe ashamed, etc) about my body growing up. I don't think that's the same as not feeling like you belong in your body/assigned wrong body (etc) though.
It could be a lot of counseling/therapy, but that might not work either. I know people say 'what if they change their mind'....has that actually been an issue?
I know people also say "my 8 year old thought he was batman" (or something similar), should I have let him become batman? But I think that's a little different. I knew at age 8 I liked the girl in my 3rd grade class...even though I had no idea what sex was or love. I just knew that I liked her. I'm sure others (lbgt+) just knew and it's not a whim.
It's not like at 8 all the sudden I was like "oh hey, I wanna bone Dustin"...but a friend of mine told me he knew at 7 he liked boys (it was pretty obvious to me he was gay).
So all in all, I have no idea how to feel about this.