While I agree that it's best to explain the consequences to your child and allow them to do what they want and learn for themselves, there are 2 problems I see with that in this situation:
1. The child is 5 and will probably not understand what you mean when you say, "You're going to be picked on and ridiculed because society can't accept people who're labelled "different." "
2. You know they will ask "why" and when a 5 year old asks why society couldn't accept them and why they'll be picked on, what will you tell them? It's like explaining physics to a 5 year old. Try as they might, they're not going to understand that either.
Ideally, I agree with you, but realistically I can't say that's a "solve-all" solution.