i think it's very silly and that the correct response is to realize it's very silly. most sane, rational people will consider it comical. nonetheless, is there some valid concern?
there might be. for example, i'm reminded of the time that i went over to sarah's place, and she picked out some clothes for me, and her daughter took the opportunity to jump on my lap when i was sitting down, with the expectation that i would read her a book (which she had picked out for me), and then proceeded to tell me i was stupid for wearing women's clothing. this hurt my feelings, and she never apologized for it. i nonetheless read the book, to sarah's bemusement, and when i stopped to answer a question she asked me, the child bit me, apparently as punishment for stopping. don't bite me, master. i could not possibly hit a child, so i was a sitting duck, too. so, there's a real concern that the drag queens may be the victim of abuse by spoiled kids and some attempt should be made to protect the drag queens from abuse by rotten children.
i'm not actually a drag queen, i'm a transgendered person that had just gone back on hormones and was trying to explain it to my unimpressed ex-girlfriend, and i had no intention of reading the child a story when i went over to sarah's on that day in roughly 2009ish. the kid would have been about five, a little younger. she'd be almost 20 now. one nonetheless needs to ask why the child told me i was stupid, and the answer couldn't be anything other than that her mother had told her as much, which sounds about right. the child was probably literally repeating something she heard her mother say about me. i realized that.
i think that the underlying concern that some conservative parents have about this is that the children are being exposed to a type of mental illness that is being normalized, which is an idea that has no clinical basis. simply wearing clothing is not a mental illness and is not in the dsm. to exaggerate the point, i want to draw attention to the women protesting against drag queens while wearing pants, apparently oblivious to the reality that they are cross-dressing, themselves. well, if women can wear pants, why can't men wear silly princess dresses? there is no rational response to that question, as clothing is merely a social construction, and one that has changed over time. by current standards, jesus himself would have been a drag queen, because he walked around in dresses, as was the norm at the time (and remains the norm in conservative parts of the middle east).
one of the reasons that the persians were seen as barbarians by older middle eastern cultures is that they wore trousers. to the greeks and babylonians, this was unconscionable. all greeks knew that real men wore robes.
viewed rationally, wardrobe choice is a meaningless triviality and all clinical analysis views it that way: cross-dressing itself is not only not a mental illness, but it's exceedingly difficult to even define as the goal posts are constantly shifting, as illustrated by the women in pants protesting exposing their children to drag queens, as they stand beside them, in their pants.
there is perhaps some latent concern underlying this "born in the wrong body" thing, but the idea was never intended to be interpreted as some kind of metempsychosis or something. that might be seen as a symptom of schizophrenia, sure. however, nobody has ever literally thought they were born in the wrong body. it's a figure of speech. it's to be interpreted poetically.
there are still two conditions listed in the dsm that are trans-related and one of them does have some vague relevance, but it is abstract and unlikely to manifest itself in real life. parents should nonetheless be protective of anybody that wants to put their kids on their lap, from strangers at the library to creepy santa clauses to religious freaks. a trusted priest or pastor with repeat access is more likely to abuse your child than a drag queen reading a book in public at the library. there's nothing particular about the trans issue, but i want to be real about this.
the first of these conditions is dysphoria, which is widely misunderstood. there are a lot of people, myself included, that get diagnosed with being left out of society due to their gender identity, which triggers conditions like depression or anxiety. for me, it's frankly more of an excuse for a guaranteed annual income, but i am diagnosed with anxiety stemming from discrimination due to gender identity. this is a real condition in the dsm, but it is a reflection of the society, and not of the identity itself.
the second of these conditions is the one that may be of some legitimate concern to conservative parents, and it is the diagnosis of transvestism as a fetish. clinically speaking, a drag queen is supposed to be defined as a gay man that puts on women's clothing for purposes of sexual arousal, in order to masturbate or have anal sex with other gay men. it is a kink, a fetish, a sexual quirk. on it's own it is harmless, but it has the potential to lead to obsessive behaviour. do you want your son climbing up on that dude's lap? maybe not.
but, i think that this is something that should be easily identified by discerning eyeballs. the drag queen that shows up to storytime in lingerie is not the same thing as the drag queen that shows up to storytime in a silly princess dress. the mistake that conservatives are making is conflating these things, but the use of language is unhelpful. technically speaking, these aren't clinical drag queens, as drag is a sexual activity, and what they are doing is a type of performance art. a better term would be "female impersonator" rather than "drag queen", and some change of language may be helpful to clarify that this is actually harmless and silly rather than creepy and gross.
parents and librarians should nonetheless be careful to erect those filters, as they would in any other context, and which they no doubt probably do.
i haven't seen any pictures of a drag queen story-time with dudes dressed like porn stars, but i would be uncomfortable with that. sure. it's not real. rather, having cinderalla (or perhaps the ugly duckling) told by a female impersonator in exaggerated costume can and should be silly and fun and so long as that is actually true it should be tolerated and enjoyed for what it is.