Isha, my Canadian sister, I feel for you. But I find myself nodding in agreement with Krisi and Gillian. I think it's vital that anyone working in critical security areas has the ability to view official ID and compare it to the person standing in front of them...and that's what happens during the final gate check in Canada, even on domestic flights. I find similarities between this situation and the furor that erupted when women of Muslim faith demanded that they should not be required to remove the veil in court, etc. Sometimes we just need to prove who we are. In the absence of a full transition and all the legal steps one must take to complete this, I think presenting ourselves as who we are on our official ID is a small price to pay for living in our great country. Furthermore, the US is also similar. Here's the official word from the US TSA:

"Making Reservations: Secure Flight requires airlines to collect a traveler’s full name, date of birth, gender and Redress Number (if applicable) to significantly decrease the likelihood of watch list misidentification. Travelers are encouraged to use the same name, gender, and birth date when making the reservation that match the name, gender, and birth date indicated on the government-issued ID that the traveler intends to use during travel."

Note, however, that travelers are only "encouraged" rather than forced to present themselves in the same gender as their ID.

But while we may differ on the need for the policy, we are certainly in agreement over one thing: the agent you dealt with, and the superior who was consulted, were rude and insulting...and clearly in need of formal reeducation, reassignment, and even possibly dismissal.