Rob: No one knows what went on in Walt's mind, but I do think he's treated too harshly. Like MANY others he may have viewed Fascism as a Utopian hope. It certainly looks great in Leni's films - whose distribution was wisely turned down by him.
Turning back to the topic at hand: I don't exactly know what Walt's view on it would be, but I'm sure Hitler would have let trannies into the party until he turned on the SA in '34. It has often been rumored that his maternal grandfather was a tranny and a Freemason. Goebbels was prevented from being a tranny because of his limp. Himmler went as far as having his testicles removed.