The question of what age a kid can or should decide for themselves what their sexual identity one is an interesting one to debate -- at 2? In middle school? Before/after puberty/sex? All of the sudden in a gym locker at age 39? -- but in the end it's ultimately irrelevant.
For one, kids develop their sense of self, their identity (gender, sexual, and any other aspect), and themselves at different times.
The point is not when a kid could/should decide, it's that they should have the freedom to do so without judgment, retribution, and shame, and with as much support as is afforded any other personal life decision.
The point of whether parents should be deciding for their kids is an interesting question as well, but one I think is more rhetorical. Does anyone really believe a parent should decide what their kids' sexual orientation should be (assuming that's a decision they could ever feasible make in the first place)?
So I think we can (and appear to be) all agree that parents should be supportive of whatever their kid wants to do in the pursuit of happiness -- whether it's their son dressing up for the day as a princess, or their daughter making a longer term decision to live her life as a boy.
In the OP's case, is the child happy with what's going on and the parents supportive? Great. Leave it alone.
If the OP is concerned the parents are forcing the kid into it and you have visible evidence that the kid is not happy with this -- aside from the fact that I would think evidence of this would be really hard to have at this stage an in these kinds of brief interactions at a school -- then I would talk to the school about what kind of awareness programs, student outreach, and other mechanisms they have to support both a child and their parents through this kind of gender issue, advocate for more if there isn't any, and then trust that if/when this becomes an issue for the kid (if at all), they have the right kind of support all around them.