You should read the entire letter in that link, it's very well stated. It talks about freedom of speech and how he university stands strongly behind it. It goes on to discuss the fact that even freedom of speech has limitations. I hope you take the time to read it.
And I honestly do see your concern, but I know you're a reasonable person so think of it like this: I would say that most people, no matter their views on the issue, would feel that people who have transitioned should have the respect to be called what they wish.
Do you agree that there is an element of discrimination if a colleague or professor continues to use a different pronoun for a fully transitioned transgender person?
If you can agree that it's discriminatory (essentially it is belittling and no different than calling someone a racial slur within a professional environment), you can understand why it's inappropriate for US as a society to decide when a person has earned their pronoun.
If you reject the notion all together that it's discriminatory to continue calling a MTF person a he, then you are the reason why we need such legislation in the first place.
It's not proper conduct in a professional or academic environment given that it's essentially a slur. In private, sure, but not in the workplace.
There is a difference between actionable and criminal (i.e. Hate speech). This issue falls in the former category.