As I said before, the real issue is with the wording of the new law. It states "the gender on your birth certificate"...
In most states, even North Carolina, you can legally change sex on your birth certificate...
Text: (b) A new certificate of birth shall be made by the State Registrar when . . .
(4) A written request from an individual is received by the State Registrar to change the sex on that individual's birth record because of sex reassignment surgery, if the request is accompanied by a notarized statement from the physician who performed the sex reassignment surgery or from a physician licensed to practice medicine who has examined the individual and can certify that the person has undergone sex reassignment surgery.
The problem is, many transsexuals haven't for some reason or another, undergone reassignment surgery. Some because of cost, some like many female to male transsexuals because there has been little success in creating a fully functioning penis. And without these alterations, you can't change your birth certificate.
This is where gender identity vs. legal gender creates a problem.
If a male to female tranny chooses to dress and live as a woman everyday shouldn't they be allowed to use the women's restroom?
And what about f to m like Buck Angel? If you went by the way the law is written he'd have to use the little girls room.
Can you imagine the scene that would cause?
As for schools, I doubt there are very many grade schoolers that are actively living as transsexuals, and I know there more than a few high school kids (I had one in my high school 25 years ago), but not so many that they couldn't be handled on a case by case basis. If anything the decision could be decided by the recommendation of mental health professionals.
And by that I don't mean that transgenders are sick, I mean that doctors determine that living as the child's associated gender is essential to their mental health and development.