Poor kid. I think people forget how absolutely deadly serious such things are for little'uns - I mean, it's easy to think as an adult "what difference does it make what you wear", but the truth is that when you really, really want to do one thing and then either can't or get mocked for it, it fucking canes. I mostly feel bad that he was ill and couldn't dress up at all >.<
I think, however, the kid's parents could have handled it better. They could have been actively supportive rather than passively accepting - although, purely because of the amount kids change their minds, probably putting off buying the costume until the last minute is a good idea xD Making an issue out of something like this, even if the kid isn't necessarily around while his parents are worrying about it or talking to other parents about it, just reinforces the idea that "normal" and "the norm" are the same thing and that going against that is something not to be done. They get enough of that at school from teachers and peers without having it at home as well.
Incidentally, just reminded me of something - the little boy I babysit, he's 9 now but they moved up here from London when he was about 4 or so. He spent the whole summer playing outside in a... I think it was Belle's dress from Beauty And The Beast. That's yellow, right? Anyway, at the start of the summer he played out on the playing fields down the lane from his house, along with his elder sister and sometimes me. Then older kids who hung out there started taking the piss, so he didn't want to go there anymore and only played in the lane leading to the fields. People took the piss out of him there as well, and he moved closer to the house. By the end of the good weather, he was playing solely in his back garden, and by the time school started he'd banished the dress to under his bed and wouldn't wear it at all except inside the house, and even then only if it was his family or my mum or me there (we're like really old family friends, so I guess he feels safe with us or whatever).