Gay men who dress in drag -- who is their target audience?

I think we need to distinguish between gay men who dress in drag, aka drag queens, and the gay transvestites of the sort I mentioned (now "transwomen"). Although there's always been some overlap, traditionally these were two distinct categories of gay men.

Drag traditionally was done by gay men as theater in a club or a theater - it's a type of male dominance display meant to entertain other men, not a means by which men tried to seduce or make themselves sexually appealing to other men.

Drag queens traditionally have done their drag acts only at selected times in front of a usually paying and tipping audience on some sort of stage. They don't perform drag FT or even most of the time, and they traditionally have drawn a clear line between performing on stage and living their lives offstage. They might be "full of themselves" and quite narcissistic, but they don't need to be the center of attention all the time. They can survive most of the day without others looking at them and "affirming" or "validating" how fabulous they are at impersonating women.

By contrast, gay transvestites like the men I mentioned - the kinds of guys who today insist they are some new breed of women - don't draw that same line. In fact, they often can't even distinguish that there should be a line because they don't have the same sort of relationship to reality that most people do, and they don't recognize or respect interpersonal boundaries the way others do. These men have a desire, indeed often a compulsion, to impersonate women as often as possible. They need to perform their play acting on the street and everywhere else in real life, 24/7 if possible. They see the whole world and everyone in it as their audience - and they are hell-bent on making the whole world their captive audience, too.

You know the old saying, "all the world's a stage"? Gay drag queens know it's a figure of speech. Gay transvestites - the ones who now call themselves "transwomen" - take it as both a profound truth and their marching orders. Along with "look at meeeeee," it's their motto.

Whilst some drag performers have always been what used to called "girly men" or "swishes" like Bowie said in the song you referenced, many nowadays - as you note - are typically masculine men who in their their real everyday lives dress and "present as" regular guys. On stage, they might've be all dolled up as caricatures of women - but until recently in history, that's not how most of them went through their daily lives, and it certainly wasn't how they dressed when going out on the town or to the baths in hopes of hooking up.

I doubt very much that an old school drag actor like RuPaul has a Tindr profile of himself in full drag. Usually, these guys date as their regular selves, not in drag.

Traditionally gay guys did drag coz it was fun and a good way to earn decent money for men who were theatrical & liked playing dress up but didn't have the acting chops for serious theater.

IMO, many of these men traditionally did drag for other deeper reasons too: to show how awful, grotesque, fake, "fishy," laughable and low-status women are; and to demonstrate that no matter what ridiculous, elaborate lengths they went to to caricature women - no matter how big the wig, garish the makeup, high the heels, giant to breast forms, OTT the mannerisms - they were still clearly and obviously men, and such they had a natural, inborn, unshakable superiority to women and could never, ever fall so low as to be a woman or taken as a woman.

By contrast, the men who call themselves "transwomen" do want to be taken as women. They insist on it, and if anyone dares not to play along it's gonna be hell to pay. But at the same time, most of these men don't want to be seen on the same plane as the women they fetishize are seeking to imitate. They want to be seen as superior women. The bestest, highest status women ever!

Gay transvestites like the streetwalkers I mentioned traditionally fit the Blanchard HSTS model: they were and usually are gay men who are attracted to straight men and have set their sights on bedding, and often partnering with, straight men. These guys usually have such an incredible amount of internalized homophobia that they reject both the gay men they themselves are as well as all other gay men.

The American TIM track athlete CeCe Telfer, who transitioned for his senior year in college partly to invade women's sport and win the title of NCAA national women's champion, explains the fantasy: https://youtu.be/ydeH-0EstiE (BTW, I don't endorse or agree with the POV of this YT channel - I think they're homophobes.)

Kinesis (who calls himself "trans rational") reveals his similar fantasy and homophobia to Miranda Yardley here, explaining that he doesn't trust other gay men and is exclusively attracted to straight/bi men and wants to find a rich one who will support him so he can stay home and make art and practice his womaning (from about 46:00): https://youtu.be/_nYR0vDwGnM

As you point out, guys who pretend to be women in the hopes that straight men will fall all over themselves pursuing them romantically are setting themselves up for failure and heartache. I sorta feel sorry for these guys, but still I don't know what they expected. Straight men are attracted to girls and women, not to men no matter how pretty these men make themselves through cosmetic surgeries, makeup and clothing. This person has a YT channel full of videos complaining about how no straight men see him as girlfriend and marriage material:

https://youtu.be/H-CsWrQtWrA

However, I should point out not all gay guys who go "trans" are exclusively attracted to straight men. This person seems to be up for action with any type of guy, and says he gets tons of action, and since sex rather than romance seems to be what he's after, he seems pretty happy:

https://youtu.be/5hS-jrvT2Xs

I know people say "Blanchard" and I guess that means there's HSTS and there's AGP, but is the only difference here in how well they can "pass"?

In Blanchard's typology, the difference between these two groups of men has nothing to do with how well they pass. Blanchard divided these men according to which sex they are attracted to and want to partner with: HSTS are sexually attracted to men and want straight men to see them as sexually alluring women, whilst AGPs are sexually attracted to women and to the idea of themselves as women and they want women to see them as sexually alluring women.

But Blanchard's typology has never been quite as either-or as it's often portrayed. All along, sexologists who believe in the Blanchard typology have noted that a lot HSTS boys and men are also AGP. A common trait amongst pretty much all men who claim to be trans is a pronounced narcissism. Some have full-blown narcissistic personality disorder or other cluster B disorders; others just have lots of narcissistic traits. But pretty much to a man, they are all madly in love with their mirrors, their selfies, their filters, their playacting, and their fantasy selves.

Due to the spreading trans craze, laws changing in their favor and the influence of internet porn - especially she-male, chicks with dicks, sissy bimboification etc - and other factors like anime, video games, LARPing, cosplay, the coddling of children especially male children, the normalization of kink, new cosmetic surgery options (FFS, tracheal shaves, implanted prosthetics meant to mimic female breasts), increasing atomization, RL social isolation, misogyny, male supremacy and libertinism - it seems that more and more of the gay boys and men who claim to be trans nowadays are just as fetishistic as the straight guys who fit the traditional AGP mode.

For more insight, I suggest some older movies about both drag and the men who used to be called transvestites but who now would be encouraged and perhaps emboldened to say they are some new kind of women - and to claim they are better at womaning than the lowly kind of women to whom they owe their very lives. Such as Torch Song Trilogy, Paris Is Burning, Priscilla Queen of the Desert, The Bird Cage, and Breakfast on Pluto.

Final word: please use paragraph breaks. It's very hard to read a wall of undifferentiated text, especially for those of us with less than perfect eye sight.