Raising a gay teen

[WendyWonders]

I am a single mum of a 16yr old boy.  We are very close, and have always been able to talk about anything.  He always loved playing dressups as a kid, and he came out to me when he was around 11~12, and I have always accept him for who he is.  He loves to cross-dress but only in my clothes.  He says that he feels more like a girl than a boy, and we have discussed transitioning.  He admits that he would like to have breasts, but is adamant that he wants to remain anatomically male.  He enjoys masturbating and was looking forward to sex with boys.

He often prefers to dress as a girl, and he loves shopping, but everything we buy I have to try on, and it has to be "mine" and live in my closet.  He loves me to help him with his makeup, and honestly he makes a beautiful girl too.  

Starting probably over a year ago, he started being very honest with me, that at 16 he wanted to be sexually active.  Much as I love him and support him, I was not happy about this, but at 16 there is nothing I can do except support him and protect him.
The one thing he hid from me, for a while, was his attraction to much older grown men.  It's all out in the open now, but I worry it's because he's never had a father figure.  

He's had relationships with boys, but he now has a "boyfriend" that frankly I think is around my age.  And honestly I am still a little shocked and horrified.  

When they go out on a date, my son dresses as a girl, but they also go to the football, fishing, etc, and he just dresses normally.  Its all a little confusing.
His introduced his bf before they started getting serious, and he's a nice guy, very respectful.  He assured me that he would protect my son at all costs, and we set ground rules that he follows.

I guess I just feel this is all a bit too much for me to handle.  I love and support my son, but this is all very new to me.
We made a rule that he would only have sex with my son in our house and while I'm home.  Seemed like a great idea at the time.  Except now I watch them kissing and cuddling, and then go off to his room.  He often spends the night, and I've also learned that they are "vers" which is really TMI.

I'd really like to hate this guy, and frankly I think of him as a more like a paedo than simply gay.  But he's actually been good for my son.  My son has never really had the opportunity to go to games, fishing, camping, etc, and he really loves it.  I was freaking out about him becoming sexually active, but he's become so much more confident and is even doing better at school.  He has also enjoyed flouting convention, but is just so much more confident doing it now.
For the first time he's really thinking about, and talking about, university and careers

Further complicating things is that I told myself that I could get serious about dating when he reached this age, and I have been putting myself out there.  But I had one bf who was freaked out about my son, so that didn't last.  And even the current guy I don't feel comfortable hosting because my son and his bf maybe around.

Sometimes I think I deserve a pat on the back for being so "enlightened and supportive" and at other times I think I'm the worst mother on earth.
So please, let me have it, no holds barred.  Tell me what you think.