I don’t now, nor did I then see it as a representation or allegory for gay people… although… I suppose someone who knew little-to-nothing of trans (or gay) people might mistake it as such— and in 1992, a lot of people probably made this mistake. So, I can see this being the case back then.
But I have trouble believing the writers didn’t know what they were doing, as they seems to capture Soren’s struggle in a pretty heartfelt and accurate way. I think the only character whose sexuality may have been considered in that episode was Riker’s, as it immediately and unequivocally established him as pansexual without even mentioning it. And that’s how you do it. Just like Jadzei Dax’s bisexuality. Or Garak’s. It was a footnote at most. We only learned about either/both through incidental actions, not because it was either announced or made a spectacle of, and neither of those characters were ever defined by it.
Edit: For me, though, at the age of 13, this episode was my introduction to the concept of transgenderism. And, for that matter, the concept of being non-binary. And both were explained in very clear and simple terms, and in accepting, non-judgemental ways. And I’m so grateful that Trek thought me these lessons first before others tried to teach me another message later. For I knew that they were wrong because what Trek taught me was something different: love and understanding and empathy and compassion and acceptance— for without those things, people get hurt. People suffer. People die.