Yeah, it seems transvestitism is the fetish and is separate from his relationships (which their success has nothing to do with the fetish.) It will cause problems though, and see if he can try to inhibit it. It's like having a habit and working to control it. In theory it is harmless, but you never know in the future how it could affect him if it becomes stronger. So just try to help him learn to control it, not DEPEND on it basically. That way it will remain harmless. Good luck!
Transvestitism is probably the most common fetish there is. For him it is a sexual thing, he gets a level of sexual excitement from it. Interestingly, the overwhelming majority of transvestites are straight males. No one is really sure of the root cause, but it is fairly harmless. You don't say how old he is but you do say he has had girlfriends. The two really aren't connected. His fetish is more of a masturbatory one, focusing only on his own sexual pleasure. Having a sexual relationship with a woman is probably a completely different thing in his mind.
Sometimes a fetish such as this can cause problems in other areas of life, such as work, friends, etc. As long as he keeps it in his own privacy it shouldn't be a problem for him.