You know, the most insidious transphobia found in the original TTYD isn't from any individual character.
Bedlam being transphobic in the Japanese release? Okay, maybe you can hand wave it as her being a terrible person who has to grow. You beat her up a few times, she supposedly accepts Vivian now, happy end. You can argue about execution, of course, but you get the idea.
Goombella's tattle being transphobic in the Japanese release? Okay, harder to forgive, don't like this, but if you really want to overlook this one, you could say that Goombella is in the wrong, whether by malice or ignorance, and that she more than accepts Vivian by the end. I'm pretty sure she refers to Vivian properly by the end - it's not like the partners get the most dialogue together, but Goombella is the one who writes that final letter to Mario, so take that as you will. Sadly I cannot find the full JP script to check for myself, so feel free to correct me.
No, the worst of it comes from the party menu. Each character gets a little blurb before describing their field mechanics. Here's Vivian's from the U.S. release:
"One of the Shadow Sirens, Vivian suffers from a bit of an inferiority complex."
Okay, describing her personality, in-line with the other partners. Meanwhile, in Japan (gonna put it under a spoiler to be safe)...
"カゲ三人組の一人だった オンナのコのようで ホントは オトコのコ" which translates to "A former member of the Shadow Trio. He may look like a girl, but he's actually a boy."
Every time you want to switch to Vivian while out of battle, you're smacked with this SMB2 Birdo-tier nonsense. It is simply unavoidable, endorsed by the game's user interface for the entire runtime. No growth, no change, nothing you can hand wave away, just some nasty stuff. And the original French and Spanish versions retain this detail and are mostly faithful to this original portrayal.
I'd like to hope that things would be handled more delicately twenty years down the line.