Ok, I was not going to bite it, but I couldn't resist.
First of all I'd like you to know I'm cis, male and straight. Now this might mean my opinion doesn't mean jack, but I'm actually very liberal and for LGBT rights. I'm also a law graduate so I happen to have a chance of changing things a bit if I'm ever in a position to do so.
I live in Brazil. This alone doesn't say much, but you need to know that Brazil, as a whole, is a Christian country, with prevalence of Catholics. People here are extremely conservative when it comes to gender issues. If you saw the comments from the average person in Brazilian news sites whenever there's news on the reality of trans* people, you'd be horrified with the people's prejudice and complete lack of knowledge on the subject.
The bulk of our educational system, before we reach university, are private schools. In these private schools, you either eat or are eaten. We don't have the luxury of LGBT groups at school, like you do in the USA. People tend to be really unfriendly towards what's different, and I can't imagine what it's like for a transsexual person to grow up here and be singled out for being different. Even homosexual people still suffer a lot, because, as a predominantly Catholic society, there's a great emphasis on gender roles and, to your parents, if you don't fit their plan, you're a failure. Trans* people suffer a lot and most mtf are relegated to prostitution because they can't find jobs where people will accept them. Changing your physical sex is already hard enough, although gladly the Brazilian health care has started to fund it, changing your documents is still a dream for many, despite a recent decision by a Brazilian court that allowed not only trans* people, but transvestites, to bear feminine documents (or masculine in the case of ftm). But then there's still the issue of society. Newer generations, who mostly live in urban areas and are in touch with the changes in the world, are much more tolerant, but trans* people still get a lot of flak, especially from male, straight, cis people, who look at LGBT people in a derisive way, make silly jokes (the "cutting off your penis" is the most common one), and so on.
That being said, I find people complaining about pronouns when the problem is much bigger than that. Seriously (and I'm in danger of offending some people here), when transsexual people struggle to simply have rights and to be accepted by society, complaining about pronouns sounds like something superfluous to me. Some people seem like they do it because it's "cool", it's a thing of our teen years, let's defy gender roles for the sake of it. And it does make the average people not take transsexuality as seriously as it should be. This is the point where I agree with Jolty, and not from this thread only. I kind of have problems with neutral pronouns since my language does not easily accept neutral pronouns (it could be considered a fault of Portuguese). I use them because I don't want to be rude, but I really think that there should be a standard everyone should agree upon, like in Sweden, where an official neutral pronoun was created. Because, if there are as many possible genders as people, like some believe, a language can't hold all these numerous and near infinite possibilities. BTW I don't think genders are infinite, for the sake of turning the very concept of "gender" meaningless, but that's a debate for another topic.
Regarding the subject of the thread, yes it's necessary to transition. At least in some degree. Transitioning doesn't mean only removing your penis and building a vagina if you're mtf. I'm not trans*, but if I were, I would at the very least not want to have to shave my face every three days, nor would I want to have a deep voice, and I would feel satisfaction in touching my chest and feeling my soft breasts. If you don't transition, you'll still be trapped in a body that hinders your gender identity and makes you feel bad because of the biological implications of having a male body (or female, in the case of ftm).
As for classification, I think transsexuality is the desire of being the opposite gender. If you identify yourself as neither gender, you're genderqueer but not transsexual (both are branches of "transgender"). If you're genderqueer then the concept of transition is almost meaningless since you can be whatever you like, you can be perfectly comfortable with your male body but wear ambiguous accessories.