I'm gonna disagree, Tilly....
The Litmus Test should be this simple....if one appears to normal folks to be a man, use the men's lavatory.
If the individual, to most, looks like a woman, use the ladies room.
In either case, close the door on the stall, and keep your business to yourself.
Wadda ya' think?
nope, got a penis use the mens room, I don't care what you look like. I care about the little girls. And BTW, there are stalls in men's rooms, so he/she can close the door there just like in the women's room.
jc......how will you know?
My Litmus Test is simpler and less liable to have the police called on you.
Because then you get into arguments where the delusional freak with the five o'clock shadow and a dress and heels insists that he's a pretty girl, when everyone who isn't hallucinating can see he's an ass-ugly man in makeup.
Thing is, as a practical matter, your litmus test is what people are going to go with, because most of us just don't care enough about the people around us to notice them beyond a one-second glance. And if they're tending to business and allowing us to ignore them as we do every other stranger we pass, that's fine. Pretty sure most decent people will agree with me when I say, "I'm not the penis police. Don't know, don't wanna know, don't care."
The trade-off is that if you CAN'T pass the one-second-glance litmus test, or you can't resist the urge to broadcast your freak status and demand approbation for it, I reserve the right to pitch an unholy public fit, and "LGBTQ rights and tolerance" does not mean a damned thing to me at that point, and should not trump MY rights and feelings just because you're a freak and I'm not.