Hi happyathiest
Can I suggest that you have a look at this website http://www.gaywitness.force9.co.uk/ which is an unofficial website for gay JWs but also contains info on transgendered individuals. While it's not endorsed by the Watchtower Organisation the info it contains about their stance on the issue is pretty accurate.
Like the story from Hobart, I'm aware of a male to female transexual in London who became a JW and was told to revert to the gender they were born with to get baptised. It completely fucked with their mind. I'm assuming this info is just for the sake of discussion and that your sibling doesn't want to become a JW?