Re: Boys and nail polish
I admit I painted DS's nails at his request when younger. I also did toes. I did buy clear afterward to on his fingernails/toenails.
Honestly I see nothing wrong with it. It wasn't like I was putting him in dresses and hairbows and taking him out in public. (Okay ... I did dress him up once when he was 6 months old but he doesn't remember. It's all good! I didn't take him out in public like that but I got blackmail photos for when he is teenager.)
I see nothing wrong with opposite-gender play. I was 5 and remember shaving my face with shaving cream and the back of a comb as my Grandpa shaved. I just wanted to be like him. I didn't *think* about the fact that girls just don't get beards or need to shave their face. I was just pretending and he let me. (More than once!)
When your little, you are exploring being an adult & sometimes you want just want to be included in something that might not fit your defined gender.
I have no clue how to deal with other kids but I don't think what the OP is doing is harmful. It's just playing and fun!