Has the military opened the door to overturning medical discharges and retirements?

They renamed gender identity disorder to gender dysphoria for a very specific reason. "It replaces the diagnostic name “gender identity disorder” with “gender dysphoria,” as well as makes other important clarifications in the criteria. It is important to note that gender nonconformity is not in itself a mental disorder. The critical element of gender dysphoria is the presence of clinically significant distress associated with the condition."

They specifically took out the word disorder because transgender people aren't "disordered." So it's not seen as a mental disorder according to DSM-5.

Since it is technically not classified as a mental disorder anymore, then no it wouldn't open the door for people who got discharged for mental health reasons for getting those overturned.

WHO considers it a mental illness still but that will change with ICD 11 in 2018. But the American Psychiatric Association does not and they publish the DSM manuals.

Also gender nonconforming is not the same thing and is not a mental illness either.

Your followup seems to focus on the singular topic of transgenderism. If you want to discuss other reasons for a medical discharge getting waived to enable reenlistment, ask again.