OK, folks, I admit my theory about Penny being trans is a bit loopy, but I didn't pull that out of the air. Aside from her appearance, I thought it explained her behavior toward Sarah (jealousy because Sarah has supportive, loving parents) and the whole "cousin/sibling" thing. If Penny WAS originally a boy and presenting as a girl, I could see the mom rejecting her ("don't tell anybody you're my kid!") but being too drunk to stop her. 

Aside from that, it just seemed like the perfect sort of twist that Christine would spring on us....