Primarily sex/gender in humans is determined by a specific gene called the "sex determining region"(SRY) (1), where there is a specific protein containing the "testis determining factor"(TDF) (1). However this gene can exist in various mutated forms. One mutation called Swyer Syndrome (2) causes total "gonadal dysgenesis" and consequently produces an XY female person who is born with female genitalia, but without any internal gonads or a uterus. Another mutation translocates the TDF factor onto an X chromosome, which produces an XX male person, and is called "XX male syndrome"(3).
|Nikki Araguz at about age nineteen|
It seems apparent that Nikki Araguz was born with partial Androgen Insensitivity Syndrome, possibly with genitals that appeared relatively normal at birth, but which could not grow any further because her body doesn't respond to androgens (testosterone). The video documentary of Nikki Araguz that was made while she was in college at the age of about nineteen or twenty provides excellent evidence of her genetic condition. In the video Nikki Araguz has all the facial features and characteristics of any ordinary female, and a matching small stature and frame. Given the genetic condition Nikki Araguz was born with, there isn't any way that her body could ever develop into a fully adult male one because even exogenously provided testosterone would not have had any effect on her.
It should be noted that cells through every person's bodies have both androgen and estrogen receptors. Some areas of the body have specific estrogen or androgen receptors that produce obvious results. For example androgen receptors in facial hair follicles produce a facial beard when stimulated by androgens/testosterone. Consequently a person will develop a beard regardless of having an XX or XY sex chromosome pair if they are given testosterone and if they have working androgen receptors. This is why XX transsexual-men who are given testosterone develop beards and lowered voices. However, such testosterone treatment would not have any effect on someone with AIS, such as Nikki Araguz. Similarly, anyone with working estrogen receptors who is given adequate estrogen and progesterone will develop breasts, as is the case for transsexual-women who take estrogen.
As for Nikki Aarguz, even without genital reconstruction surgery, and despite presumptively having an XY sex chromosome pair (apparently not yet confirmed with DNA testing), she was never truly male because her body is only able to respond to hormones in a female manner. Given a full understanding of the science of sex determination, it seems that given a "reasonable person" standard, it makes complete sense for Nikki Araguz to be medically treated to enable her to live a fully female life since her body wasn't able to develop as a male at birth, or throughout her life, in any event. Hopefully the attorneys for Nikki Araguz will have the opportunity to present this level of expert scientific testimony to the Texas Court considering whether or not she should be considered legally female.
(1) sex-determining region - http://en.wikipedia.org/wiki/SRY
(2) swyer syndrome - http://en.wikipedia.org/wiki/Swyer_syndrome
(3) xx male syndrome - http://en.wikipedia.org/wiki/XX_male_syndrome
(4) androgen insensitivity syndrome - http://en.wikipedia.org/wiki/Androgen_insensitivity_syndrome
(5) x chromosome - http://en.wikipedia.org/wiki/Y_chromosome