In the context of the early 70s you have to take this song as a reflection of the general and sub pop culture. There seems to be a Warhol/Factory drag queen thing afloat that might also rub up against the ambience of psychedelic/amphetimine music culture via Woodstock/Altamont. There are a lot of crowd noises incident in Elton's take.
Good or even great art always allows room for interpretation. Benny and the Jets is a very good example. We, the audience can take of it what we will.
I wanted to mention that I totally sided with Elton when he let loose a few years ago in outrage of the recording industries' overuse of vocal tuning processors. What on earth would Hank Williams think of Taylor Swift?