I guess I just don't consider this mishandling a trans character. If another character did go out of their way to convince them not to transition I could almost see why they might be offended, but that didn't happen. This character just didn't and lived as a gay man instead. It seems by their logic that the character transitioning would somehow make the game homophobic.
And to be fair, this is a Japanese developer. They have an entirely different culture. They don't really care about identity politics as far as I've seen. I don't believe that they purposefully tried to be derogatory towards trans people.