Yes, that would be because gender dysphoria is a mental illness, [@Penny], and in the context of what we are speaking to? Is classified by regulations as one, even if the newest documentation standards have changed. Now I am not going to delve into the depths of why it was changed or the controversy surrounding it, how they changed it to a "nicer" name as "Gender Identity Disorder" among other changes, see the various forms of autism and its relatives being rolled into a spectrum disorder for other controversial examples, but that is very fact of matter, that too not requiring too much digging to find it continually classified as a disorder and form of dysphoria. If memory serves, even the ICD-10 still denotes it as a mental illness, and that was touted to have changed. Again, this is utterly ignoring the supposed 36 months of stability by the memorandum's proposal, which is pretty gracious considering not everyone even gets that much.

As an addition, I did indeed go dig up a sample of the ICD-10-CM:

[quote=ICD-10-CM F64, F64.0, F64.1, and F64.9][b]Clinical Information[/b]
A disorder characterized by a strong and persistent cross-gender identification (such as stating a desire to be the other sex or frequently passing as the other sex) coupled with persistent discomfort with his or her sex (manifested in adults, for example, as a preoccupation with altering primary and secondary sex characteristics through hormonal manipulation or surgery).

[b]Clinical Information[/b]
Severe gender dysphoria, coupled with a persistent desire for the physical characteristics and social roles that connote the opposite biological sex. (apa, dsm-iv, 1994)

The urge to belong to the opposite sex that may include surgical procedures to modify the sex organs in order to appear as the opposite sex.

[b]Clinical Information[/b]
A disorder characterized by recurrent sexual urges, fantasies, or behaviors in a heterosexual male involving cross-dressing.

Disorder characterized by recurrent, intense sexually arousing fantasies, sexual urges, or behaviors involving cross-dressing in a heterosexual male. The fantasies, urges, or behaviors cause clinically significant distress or impairment in social, occupational or other areas of functioning. (from apa, dsm-iv, 1994)

Severe gender dysphoria, coupled with a persistent desire for the physical characteristics and social roles that connote the opposite biological sex. (apa, dsm-iv, 1994)

The act of dressing like and adopting the behavior of the opposite sex, often for sexual gratification.

The urge to belong to the opposite sex that may include surgical procedures to modify the sex organs in order to appear as the opposite sex.

[b]Clinical Information[/b]
A disorder characterized by a strong and persistent cross-gender identification (such as stating a desire to be the other sex or frequently passing as the other sex) coupled with persistent discomfort with his or her sex (manifested in adults, for example, as a preoccupation with altering primary and secondary sex characteristics through hormonal manipulation or surgery).[/quote]
As another note do try harder to insinuate I am somehow "transphobic" or discriminatory against transgender people because I find the notion they deserve any sort of special privileges or exceptions to be utter nonsense. Thus far I think you are ringing a little hollow there with those efforts, but let me be absolutely sure no one falls for them and state outright my personal opinion again. I personally do not care who or what a person is or believes themselves to be, in fact they should strive to do their best in that provided they are not harming anyone, but the rest of the world isn't obligated to play along or care. Why do I back the Department of Defense's findings and the employment of policy based on it? Because I can find no good reason or benefit this offers to the military and can find more pros in place of cons.

At the end of the day the military has the right to reject potentially problematic individuals found through their screening processes, even if that isn't a "nice" thing to say or politically correct.