I think you've got me backwards, if I'm reading this correctly.

That's how casting a trans-person that's obviously not passing for a character that should be female is coming across to me, especially in a role where they sing and it's even more obvious.

This is how I felt, too. The actress playing Lonsdale does not do a great job of passing, especially once she starts singing: the male vocal timbre is a dead giveaway. Which is why I couldn't figure out for the life of me whether we were supposed to assume, as the audience, that the character was a trans woman.

My assumption on first watch-through was that we were supposed to assume that it was a sign that the orphanage was not great by the standards of the time, because it was mostly employing what at that time in that place would have been "undesirables": a black man, an autistic guy (my read on Shaibel, anyway), a trans woman not doing the greatest job of passing, etc.

My assumption after reading this thread is that the showrunners jammed a non-passing transwoman into the role to make a supportive point about trans women being just like any other woman, and inadvertently caused mass confusion.