fem·i·nize:
1. To give a feminine appearance or character to.
2. To cause (a male) to assume feminine characteristics.
If your appearance and gender role in your youth was a boy's, then to have dressed you in feminine clothing would have given your appearance a feminine character, compared to the boys' clothes that you normally wore. So the use of "feminize" is correct. If you and your family knew that you were a girl, then you would have been wearing the correct clothing.
However the term, when used by CDers, has taken on a fetish quality, maybe because every time I hear it I think of "forced feminization". I much prefer the use of "to dress in a feminine manner".
