it is definitely a normal thing for children to enjoy "dress up" whether it's in same or opposite sex clothes. i myself always chose to wear mens clothing because it was more comfortable, and as a young child (up until about 7/8) my brother used to walk around in my mother's bra, or clothes, or even mine (i'm 5 yrs older...and he was a tiny lil guy) but a couple yrs after he stopped that, he got uncomfortable seeing women in underwear, even on tv...and even in bikini's because they looked like underwear. i'm not exactly sure what the problem was, especially since only yrs earlier he was wearing bras lol...but for some reason, he freaked out (and says he doesn't remember ever doing that).
as for whether or not it's some kind of "hint" to what the future holds, i couldn't say, either way i would explain to him how it's his sister's clothes, and that those clothes are for girls, not boys, just as you said, as you would do with any other behavior you don't see as appropriate. though, if he persists, and continues i wouldn't upset him over it. who knows, maybe it's something that he chooses that could stick with him...one never knows until they're older. i'm glad to hear that IF he were to choose this as his lifestyle, that you wouldn't want him to feel bad about it. i feel that's the most important part of it all.
good luck with this. maybe you can get him to stop by explaining how the clothes are meant for girls, not boys, but just remember, no matter the age, they're going to do what they want to do and if it's something that may not be the "norm" for society, you can't let them get hurt emotionally just because they're different. so for the moment, take it as "dress up" for him and maybe try getting him to dress up in daddy's clothes but explain to him. with all the different people in the world today, this is the least of your worries. all that matters is that he grows up to be a happy and healthy man who knows right from wrong and that everyone is different and shouldn't be judged (including him if he happens to want this for his lifestyle).