Very nice post Megan. Let me try to be a proponent of blending...with a cavaet....
While I often speak of blending (which I truly feel is a better and more quantifiable goal than "passing"), there are times when I go against the grain. The difference is expectation. Let's take Megan's example of the CD who was struttin' her stuff at the outlet mall in her evening best. If she were to come into these pages afterwards and say "boo hoo, everyone looked at me, etc", I'd probably be critical in my response as in, "what did you expect? look at what you were wearing and where you were at".
However, like any other woman, there are times where I choose to dress down a bit, more comfortable for the time, place & weather. Yet there are others where I say what the heck, time to dress it up a bit, knowing fully well I may not blend in with the crowd like I might prefer. But it's my choice, like any other woman. If you want to overdress for a situation because it's fun to break out the dress and heels, knock yourself out. There are no rules saying you can't. But be aware that it may affect your ability to blend in with the crowd. If that doesn't bother you, all the better.
The only "rule" I abide by personally is to always be respectful of the image I'm presenting. Respect for women and respect for those TG's who are full-time and may follow in my wake.