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It's not a punishment to have an honorable discharge, if one's service rates it - you do not have a right to service. One precedent for that would be the COVID vaccine, which was implemented mid-tour for the vast majority of the military, and whose refusal would get you kicked out during the previous administration, as that POTUS decided it was now a necessary condition of service (full disclosure: I was serving in a civilian capacity in a military command at the time, was required to get the shot, got it, and had no problems doing so).
If you want to say that leadership are being dicks about it, sure, but, retirement? For someone with 15? 15 years to get a retirement for life? That's.... that's a stretch, even for me.
The covid vaccine was an emergency safety measure, kicking trans people out was a political one.