As I understand it, transsexuals have genuine neurological differences from their "biological gender". Certain features of their brains are structured in ways usually present only in the opposite sex. In this sense, they really are another gender "on the inside".

That said, I personally would try to accommodate otherkin if they consider themselves "really" a species that can easily map to a lifestyle. For example, If an "elf" wants to get surgically-altered ears, live in a cottage in the woods, caring for plants or whatever, that would be fine with me and I would strongly object to mocking them or trying to force them to live a normal life. If they believe they are a reincarnation of an elf from another dimension, I might try to persuade them that reincarnation is bunk, perhaps using the example of all the other people who claim to reincarnations of historical figures. But I would avoid referring to them as "human", except when it was clear that I was referring to biology.