If they still have a "package". They are not a woman. To put it bluntly. MTF trans are not legally female until they have gone through Sexual Reassignment Surgery.
And if the person in question tries to mis-represent themselves. It certainly is going to invite serious trouble.
That's true in some countries and states, but not universally so. In the U.S., many states instead require proof of "appropriate clinical treatment" by a doctor, leaving the details of what hormones, therapy, and/or surgery is necessary up to the medical community. (cf.
http://www.lambdalegal.org/know-your-rights/article/trans-identity-document-faq ) Further, there are states and countries that recognize non-binary gender.
The issue is that gender matters for a great deal of public interaction in society, and genitals are the least public part of a person. There are a number of physical features that differ between typical men and women - facial hair and features, hand size, breasts, figures (hands and hips), as well as genitals. Either due to rare natural conditions (the various intersex conditions) or because of medical treatment, though, this pattern can differ. Many would say that if the government is going to be in the business of declaring binary gender for people on public documents, that it should primarily match the public parts of a person.
As far as social interaction goes, there is the question of when genitalia should come up. This doesn't even have to do with being trans per se. For example, a man can have an impotence condition or a damaged penis. When should he reveal that to someone he starts to date? I don't have any definite position on this. However, I think that oversharing can also be inviting trouble compared to keeping one's genitals a secret. Consider a trans woman in pre-op status who passes as born female, like Blair White. She could only tell a person if she is at the point of potentially having sex with them. This could result in a violent reaction, but at least she's had a chance to gauge that person. However, if she declares early in any interaction her status, then she's telling a lot more people, and is more likely to accidentally tell someone who is violently anti-trans.