I appreciate you being inclusive in your story and would urge you not to abandon the approach. I feel some of the confusion in the intro was not do to gender issues, but more lack of clarity. Brainstorming some ideas for pronouns:
- They - This is currently a common choice. It is still new enough in usage that it probably requires addressing Naz's sexuality earlier, rather than later.
- Don't use any pronoun for Naz - Introduce Naz with a full multi-syllabic name and then use Naz where a pronoun would normally be used. He and She could still be used for other characters.
- Invent a new pronoun - This would need to be introduced very early in the story. The pronoun could apply to non-conforming types or could apply to all instead of he / she / they.
If Naz's gender identity is important, you may want to reconsider reverting to standard he, she pronouns. This also preserves the ability to show bias in other characters by having them use he or she rather that Naz's preferred form of address. I think it might be most effective to simply reveal Naz as transgender at the start and not try to do a big reveal. Representing a transgender individual as accepted by default would actually be a pretty powerful statement in the story.