The book itself touched off a furor among transsexual and transgender people, in large part because Bailey's theory flew in the face of their individual experiences. I'll leave the dissection of Bailey's "theory" to others. In my view, it is sufficient to say that his theoretical construct is a bit of a "reductio ad absurdum" that attempts to define gender identity in terms of sexual identity... and in doing so fails utterly to address the narrative so common among transsexuals. I do not think Bailey is necessarily a homophobe (or transphobe, I guess), rather he just doesn't "get it".
That Bailey is reviled among the transsexual community is not a huge surprise. When your work is cited and reviewed favorably by NARTH, you have to know that the affected communities are not going to be overly impressed. When you walk up to an entire group of people and tell them that their experiences and self-definition are "invalid" in some way, you guarantee that you will earn their animosity. When the argument used is seen by many as weak, or not well supported by the evidence, then you can expect to experience a persistent and stubborn backlash.
The report I mentioned earlier does describe some pretty awful things that have been done by a few in response to Bailey's book. I do not condone threats of harm or outright attempts to blackball the man professionally.
That said, many are trying to claim that Bailey's experience is "chilling" to academic freedom. I disagree. Bailey's book is a mass market publication, which puts it firmly in the public square when it comes to the political discourse. Perhaps where Bailey's biggest error lies is in the reality that not only did he publish the book relying on his credentials to bolster his argument's credibility, he failed to put forth a compelling body of evidence to support his argument.
Perhaps this comment from Bailey (via Lifesite) tells us this most clearly:
Referring to the bitter controversy surrounding the work, Bailey stated on his website "Although the critics have produced a litany of alleged sins, their main complaint is something that I actually do write, and believe."
Well, since Bailey claims to be a scientist, he should be well aware that if he is going to put forth an argument that flies in the face of a great deal of evidence, his own model and evidence has to be pretty compelling. Simply writing a book like that from a perspective of "what he believes" would qualify as both irresponsible and a serious mistake.