I don't think leaving it blank is a solution as it becomes a database error. I have several unnamed, sex unknown babies in my family tree and they continuously get flagged as in error. If this was the appropriate response they would not be flagged as an error.
As for transgendered folk, I think the issue is different. Some are open and above board about their change, others are not. And in 200 years their profile won't be private anymore. May not seem relevant now, but it will be.
So I do think we need a third option. Perhaps something that just flags the sex of the person being further discussed in the profile. Some people considered themselves transgendered, some are intersex and in other countries multiple identities exist. I don't think "other" is correct, no one wants to be "othered".