The Guardian published a several years ago an excellent article on two-spirit people in NA culture. I'm sharing it here because i ran across it again and had forgotten how good it was at giving an overview on how some tribes treat/view those who don't fit in the heterosexual norms. I also like how the author points out the harmful influence of colonization on indigenous culture in the Americas.
Here's some fave quotes, but please be sure to head over and read the article in toto!
Rather than the physical body, Native Americans emphasised a person's "spirit", or character, as being most important. Instead of seeing two-spirit persons as transsexuals who try to make themselves into "the opposite sex", it is more accurate to understand them as individuals who take on a gender status that is different from both men and women. This alternative gender status offers a range of possibilities, from slightly effeminate males or masculine females, to androgynous or transgender persons, to those who completely cross-dress and act as the other gender. The emphasis of Native Americans is not to force every person into one box, but to allow for the reality of diversity in gender and sexual identities.
Most of the evidence for respectful two-spirit traditions is focused on the native peoples of the Plains, the Great Lakes, the Southwest, and California. With over a thousand vastly different cultural and linguistic backgrounds, it is important not to overgeneralise for the indigenous peoples of North America. Some documentary sources suggest that a minority of societies treated two-spirit persons disrespectfully, by kidding them or discouraging children from taking on a two-spirit role.
Two-spirit people were respected by native societies not only due to religious attitudes, but also because of practical concerns. Because their gender roles involved a mixture of both masculine and feminine traits, two-spirit persons could do both the work of men and of women. They were often considered to be hard workers and artistically gifted, of great value to their extended families and community. Among some groups, such as the Navajo, a family was believed to be economically benefited by having a "nadleh" (literally translated as "one who is transformed") androgynous person as a relative. Two-spirit persons assisted their siblings' children and took care of elderly relatives, and often served as adoptive parents for homeless children.
In the 20th-century, as homophobic European Christian influences increased among many Native Americans, respect for same-sex love and for androgynous persons greatly declined. Two-spirit people were often forced, either by government officials, Christian missionaries or their own community, to conform to standard gender roles. Some, who could not conform, either went underground or committed suicide. With the imposition of Euro-American marriage laws, same-sex marriages between two-spirit people and their spouses were no longer legally recognised. But with the revitalisation of Native American "red power" cultural pride since the 60s, and the rise of gay and lesbian liberation movements at the same time, a new respect for androgyny started slowly re-emerging among American Indian people.
If you want to learn more here's a good resource to check out: