I'll stick my neck out and say that on the face of it, I don't like the idea of Drag Queen Story Time, but I also have questions/caveats about it (in no particular order). Maybe it depends on the drag queen herself? Most I've seen look, in my opinion, absolutely frightful in their make-up. I could see how they might frighten children. On the other hand, if you had someone dressed and made up as conservatively as June Cleaver (complete with pearls), then maybe that's not a problem? And then again I can see how children could be confused--and I wouldn't want to be the parent who had to answer a child's questions about this person who read a story to the group of kids.
Jeff, being the mother of two boys and grandmother of younger children, the time to introduce children to the differences in people is at a young age, the age group of children who attend storytimes.
There is an age when small children are afraid of Santa and the Easter Bunny, between 18 months to 3 years, give or take. Some storytimes are geared to the younger kids, but most are geared to the kids who are past being afraid of differences. If parents have either an objection to the presenter of storytime, or they think their child will have a problem, they shouldn't attend with their child.
You'd be surprised though how easily young children just accept others who don't look quite like themselves. Young children have not formed prejudices yet. It's only when they get older and they hear their parent's prejudices, that sometimes they will form theses same ones. Young children are a delight in the acceptance of others, no matter what color or how they dress.
I had several gay friends when the boys were growing up and they were invited into our home by both Rick and I, so my boys don't think of gay or straight. In fact both boys have gay friends.
So unless the very young children who may not have been socialized much or are too young to be at an older child geared storytime, shouldn't be there anyway, no matter who is presenting. My granddaughter is in kindergarten, and this far into the school year, the children who weren't socialized before they started kindergarten still have problems separating from their parents in the morning at drop off. One child was even withdrawn from school after about two weeks because they just couldn't take being separated from their mother.
To me it is very important as a mother and grandmother to socialize your kids and to introduce and and show acceptance of everyone. Luckily my son and DIL feel the same.