If it's done for a laugh or a charity event or whatever, then why not. People get to laugh *with* them and it's all good fun.
As for actual transvestites - ew, no. We have one in our local area, and he's extremely manly... hairy legs with stockings on, *massive* feet, this big round extremely fake looking wig, make-up etc. He looks absolutely awful. He gets filmed on phone cameras and texted around a lot these days, and even featured on a youtube video which is now famous in our area - I'd feel sorry for him, but he's got such an assy and arrogant personality that frankly he deserves what he gets.