I really liked this episode, and it seems this show just keeps getting better. I loved the fleshing out of the Frank character from being a weirdo...well still being a weirdo, but one who has some redeeming qualities.
The bullying story may have been a bit predictable and cliche, but it is done well. I was expecting his father to catch them fighting the tranny and disapprove once again, which would have been funny. The whole thing brings Jimmy yet closer to Sabrina and him further away from being an utter man-child.