Children also hear things in the media that we think we are shielding them from. It is possible to have heard something negative that way as well.
Also it is very sad to report that kids call each other "gay" and "retard" all the time. I correct all the children in my life because that just upsets me to no end.
Mom should have told those busy body moms that all throughout history, men have long dressed up as women in plays. Women were not even allowed to be in the plays!