I don't even know if this is cross-dressing. Until the 20th century boys were usually bought up exactly the same as girls for the first half-decade or so. Which utterly gives the live to pathetic nurturists and feminists alike who claim differences between the sexes are due to early upbringing.
Many of the little loves grew up into bearded old devils of soldiers in the Victorian era.
It was definitely crossdressing in the cultural context of the story arc in the game where it happened, because Cloud was a grown man. (And yet, if you achieved the maximum possible success in the quests leading up to it, the mob boss would pick crossdressing Cloud as his paramour for the evening.)
It is certainly true that dresses only mean "female" in specific cultural contexts. But the scene in which Cloud wears this dress is one of the cultural contexts where a dress means "female".