Cowboy Bebop - E9 - Jamming with Edward

What's your take on this ep re references to Ed being a "drag queen", having had "surgery", and/or "gay"? I watched this ep with both original audio/eng. subtitles and dubbed version (where each use different terms), and I still can't piece together what they're saying about Ed. And then at the very end, Faye says "hey, you're a girl", and Ed laughs.