For sure, the Washtowel (and the hounders) handle issues like these in the way that creates the maximum amount of problems for such people. Instead of letting it be up to the individuals, they will hound and harass such people no matter what they choose, since they could be potentially classified as homosexuals regardless of which gender they choose.
If one must make a distinction, a doctor is much better equipped to make it than some hounders that merely wish to ruin lives. A doctor would be able to do medical tests and assign a gender. Even better is, what role in reproduction is the person best suited for? If a person has rudimentary male genitals but is capable of becoming pregnant and bearing a child to birth, most likely it would be assigned female. If a person is capable of getting someone pregnant but ill equipped to bear children, they would be male. Again, a doctor is much better equipped to make that decision. If a person is capable of both (or neither), that issue is better discussed with a doctor than a religious minister (let alone the hounders, too many of whom like to ruin lives).
And, there should be nothing wrong with the person's making the decision either way. If a person is of ambiguous gender, that person is more likely to be bisexual anyways--especially if they can function equally well either way. This is none of the hounders' damn business.