I think the issue kind of boils down to trends and what's considered acceptable to depict. There's a lot more comics with ambiguous gender characters or "crossdressing" guys that are constantly playing in the space of transfem identities, yet deny that label for making the character "just" a crossdressing guy. And Xiaoyang is ABSOLUTELY dealing with transfem themes and spaces beyond just clothes, but in Xiaoyang entire presentation and troubles, with the exception of gendered language. And that just... with a trend of characters like this, but with the work trying to make sure the audience knows they're "really male" and "just crossdressing", it really starts to leave a sour taste every time it happens and a character isn't acknowledged as trans (not necessarily a trans woman, but transfem in SOME way be it genderfuild, agender, some other non-binary identity)
I like Xiaoyang. I like what the story is doing with the parallels between Xiaoyang and Xiaoen and how it ties into the larger themes and narratives of the comic. But Xiaoyang is part of a trend that is lowkey transmisogynistic, because it's a trend that combined with the lack of explicit transfem (and trans women especially) representation, that softly reinforces transfem erasure - intended or not.