Despite the fact that it is so much easier to make the transition before puberty? For adults, the amount of pain and trauma is much greater -- the electrolysis alone takes several sessions a week for over a year and costs thousands, not to mention the other secondary sexual characteristics.
On the other hand, we DO know what growing up in the wrong body will do to a child . . . and it is NOT good.
The World Professional Association for Transgender Health (often considered frustratingly conservative) says the following about transgender children:
I had to look up Tanner Stages, so here's that information, too, for males:
And, for completeness, in females:
There are more stages, of course, but one to each side of the cited stage should help you pinpoint it.
That said, this was an opinion question, originally. Viper's right; it's not a choice. Treatment options are the real question. Given professional opinion on the matter, I would not countenance surgery on a seven-year-old. I can, however, see why many TG people see the system as the enemy; there's very little respect for the patients there.
I would allow the child to wear clothing appropriate to her real (rather than apparent) gender, however, and change the name if necessary. If I were sending the child to school, I would fight for recognition of her real gender there, and teach the child how to fight that battle. I would not allow the child to move faster than the experts require, but I would not require her to move slower, either . . . and if she disagreed strongly enough with the restrictions, I would support her in lobbying and/or protesting within the law. I would be prepared to discuss the advantages of staying closeted (more likelihood of 'passing' as the real gender) or not (one can't lobby from the closet, and societal realities force most TG adults to remain closeted).
Of course, I would hope it was a passing fancy, but if it's not, denial won't make it go away . . . and I'd rather fight on the side of my child than against her, and I'd do almost anything to avoid the sort of thing that happened to
Brandon Teena.
Related link:
http://www.transkidspurplerainbow.org/pdf/10questions.pdf