Those who oppose it would arguet there's a few points. First - there's the clear message that if you don't let your children interact with drag queens and people of alternate sexcual orientations on demand you're a horrible person. Sure it's not MANDITORY, but only TERRIBLE people would keep their kid away.To be clear, given it was not a required activity in school and all the kids were there voluntarily, I have no objection per say. I just don't see the point.
Second it could be said that while the kid would not understand the whole 'drag queen' thing and would probably look at it like a type of clown or other entertainer who dresses up, it does still equate "drag queen" with "Fun' and "entertainment", which of course makes talking to drag queens desirable for kids and even as they grow up that tends to stick with them. so it has the appearance of programming or 'grooming' ( i'm not even 100 percent sure what that term means).
Here's the thing. if it was about going to see "Ms Chatalein, entertainer" who happened to be a crossdresser and that was part of the act, i don't think as many parents would care. But because it MUST be billed as "drag queen story time" and the whole focus is on the fact it's a drag queen, that means it's not about the entertainment, it's about the sexualization of the entertainer. And a lot of people have issues with exposing kids to sexualized issues at a young age. They'd probably be just as opposed to "Stripper story time" even if the stripper was straight, or 'dominatrix' storytime or the like.
Kids story time should be about the story - not the sexuality or sex/gender behavior of the storyteller. I can see that argument.