It's certainly a fascinating phenomenon. I like to think of myself as forward-thinking, but lately I've had to do some soul-searching on that. My son is obsessed with Ariel. So anything with the Disney princesses on it is automatically a must-have item for him, simply because Ariel is on there too. Unfortunately he has passed this princess fascination along to baby sister and now I have two children clamoring for princess stuff when I always swore I would never, ever do that.
They are both fairly gender-balanced, and if they were the same size they would happily exchange clothes. DS gets upset he can't wear sister's butterfly and Minnie Mouse shirts, DD gets upset she can't wear brother's Thomas shirts. I mainly say no because they're the wrong size. But deep down I also freak a little about what people will say, in part because I've already heard a lot of it. I got flack at Kohls from a cashier because I bought DS bracelets to play with. He's incredibly pretty and was constantly mistaken for a girl (sometimes still is) while DD is still often mistaken for a boy (even when wearing a dress). I had an old lady get cross with me when I corrected her because my son was wearing a necklace (amber). I can only imagine the kind of crap I'll hear if I let them wear each others' clothes. I want to protect them from that. But I think I need to stop fighting it and just go with the flow.