I like your take on it; the issue comes in that conflict where external labels don't align with internal pronouns (or any other form of self-identity, such as identifying as a particular race despite genetic dominance). We want to respect people's self-image, when we can, don't we?

For me, it's the good faith test. It can be difficult, or impossible, to determine bad faith, but sometimes it's obvious. Trans people usually seem sincere about their identities, so I take them at face value. A meat eater insisting they be called 'vegan' is just mocking self-identification and kicking back at the whole pronouns thing, for whatever reason. That's not good faith; that's being contrarian.

That's my line, until someone convinces me of a better one.