Oh my god the book sounds very confusing even to me lol It is very impressive you are able to read and write Japanese! and yes, you did understand correctly. it's like 歯医者さんの佐藤さん。Mr Sato the dentist. describing about Sato. and no, in this situation, のis not of as you said. 女装さんIS very weird to say and unusual. anyway, I'm glad i was able to help :)

キュート Is CUTE which is 可愛い Is this about a cross-dresser? dressed as women? it's kind of a strange sentence anyway. but basically says "Shizuka san as Drag Queen san" this is a book, therefore you need to figure out the tones / feelings of the writer but from what I THINK in this case,女装さん as to explain the individual (shizuka) identity. sometimes we say, あの人は女優さん (she is an actress ), タクシーの運転手さん (taxi driver) not for every occupation but we often use さん this way. Now, I'm wondering why we do that lol It definitely softens the tone though. I hope this makes sense. This is why Japanese is very hard because somethings are not in black and white.