We make the same kind of jokes in Lord of the Rings Online. On the character creation page you can select Race of Man, Elf, Hobbit or Dwarf. For the races of Man, Elf and Hobbit you can select whether you want a male or female character. For race of Dwarf there is only Dwarf since by lore female Dwarves are indestinguishable from male Dwarves by any of the other races. However, for the race of Elf, if you put a dress on a male Elf they do look like females :) Males of the race of Man or Hobbit however, if put in a dress usually look like Jerry Springer guests.

There are people who do portray their Dwarven characters as females though. As a LotR lore junky I have problems with that. I don't care if a player conciders their Dwarven character to be female. However, if they had any understanding of the lore they would keep that to themselves as like the Dwarven language that is a closely held secret. Especially concerning female Dwarves. According to the lore only 1/3 of the Dwarven population is female and less than 1/3d of them ever get married.