Becoming a woman wouldn't change his sexual preference though. I'd think if he wasn't physically attracted before, he wouldn't be after.

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As I see it, he's just a straight guy who fell for someone who happens to be another guy. My honest opinion is that if the other person wasn't gay, and therefore wasn't interested in Yog, Yog wouldn't be feeling this way about them. It's a situational romance, in which the other person's kindness and attention has reached a lonely place within Yog, a place deep inside where he craves intimacy with another person. Yog rationalizes that if the other person were a woman, it would have been perfect, so he clings to his feelings despite not being able to become physically attracted.

The thing is, it's just not going to work out short of abandoning a sexual relationship(or coping with one, if you're up for that). If you value this person so much, wouldn't it be best to stay as friends, rather than trying to hold a type of relationship together that could lead to heartbreak? Friendship seems to be extremely underrated in this situation. Shouldn't you both leave your heart open to someone more compatible? Is this thing between the two of you really enough to get past the problem of sexuality, or would it be better to grasp forearms and come to the realization that the friendship you share is worth enough to make you both happy longterm? I don't think there's anything else some outsiders can say to help, so you need to take some time to sit and think about what's best for the both of you.