Was O-Sei a male prostitute, or just pose as one and kill clients?
He was the one who dressed as a woman. If you look at the flashback scene, you'll see O-Sei and O-Kinu, the two children in the house of someone that took them in after their family was murdred. In the house, they're eating and a woman comes in and tells O-Sei the master wants to see him, then she smack the food out of O-Kinu's hands and tells her to clean it up. She does so, then peeks in on O-Sei and the master. The master dresses O-Sei in a girl's kimono and says "If you do everything I tell you, you can be my special friend." Yeah, okay there, kiddie raper.
In the next scene, the two siblings, still as kids, are sitting in front of a house when a man walks by. O-Sei approaches him and asks, "Do you want to spend time with me?" O-Sei and the man walk off. O-Sei comes back with some coins in his hand. So in that one scene, it's not known if he killed the man or performed a sex act.
In the scene where O-Kinu and O-Sei are introduced, they kill their client, the family clerk, but that was because he helped kill their family. Later on, they try to kill Zatoichi and Shinkichi, the man that Zatoichi met at the gambling hall. They had nothing to do with their family's deaths.
Then later, Shinkichi says he'll have a bath. O-Sei says he will too. I know it was common practice for men to bathe together back then. It continues even today, and in several Asian and Middle Eastern Countries. But they were in a small tub together. Also, Shinkichi asks why O-Sei dresses as a woman. O-Sei says he prefers to dress as a woman.
So with that, O-Sei could be...
1) male prostitute
2) posing as one to kill clients and take their money
3) a transvestite.
I'm learning towards a bit of both on the last two.