Wow, that is a loaded question Marla. I think to sum it up in a word that would have to be fear, fear of the unknown. We make people uncomfortable because they dont understand the difference between sexuality and gender so they are "repulsed" by us. Maybe they question their own sexuality, I dont know. Anyway, that carries on to a host of other reactions that go from "whatever" to violence.
I think that the myth was well established with the flaming drag queens. They were and are flambouyant and so when most people think of crossdressing they think of the drag queen first and that becomes the gold standard for them.
Society with all its bigotry find it very easy to center out those who are different so we are at the least marginalized but more likely discriminated against because we are "easy" targets.
Just my :2c: worth
Kimberley