A thoughtful post deserves a thoughtful response, even though we don't agree on this one, Isha. In my opinion (and years of arguing over this hasn't changed my opinion at all, nor have I convinced anyone else I'm right), Transgender refers to people who are actively engaging in dressing, seeking a transition, actually transitioning, dating members of the same gender (whether pre or post transition) because they are members of the same gender. Yes, it's broad, but I don't see how it could ever apply to a hetero CD who dresses at home, doesn't interact with people while dressed except at costume parties, etc. The distinction, at least in the U.S., is that people in the first group in my example do suffer discrimination. Those of us at home don't, we can take or leave this. We don't have desires to date men when we are dressed, thus we really don't have that much in common with the rest of the LGB group. But those who do, or those who date women after or during transition, do relate to the rest of the LGB community. This does not mean, as many accuse, that we have no sympathy for the LGBT community or are afraid to admit we're a part of it, we just do not and never will see how what we do has anything in common with those who are living their lives in the public eye while dressed.
Maybe this helps, maybe it doesn't. By analogy, it would be like me saying "anyone who dresses out of their home on a regular basis is really a transsexual, regardless of whether they know it or believe it." My statement wouldn't be accurate and would probably offend a number of people, as not everyone wants to be part of the bigger group or should be lumped into an umbrella group.