>>2279038You need to remember that Black Butler takes place in Victorian era London, back when all the surgeries and medications needed to transition were basically nonexistent or weren't tested to the point of it working correctly. Yes, it is canon that Grell does want to become a woman but due to the time period in which he lives in he is unable to transition at all and thus he needs to cross dress in order to actually feel like and identify as a woman. Also it's perfectly fine to use male pronouns with Grell because he has never once canonically told anyone to use female pronouns when addressing him, meaning he is male until he says otherwise.
