Well, it sounds like you've already dealt with it. Haven't you?
My general answer is that Weddings Suck and Only Cause Stress, so Your Goal is to Get By, Period. In other words, choke it down and do whatever is asked of you, remembering it's not Your Special Day, it's someone else's Special Day, and she is going to be super stressed anyway without guff from you. However, you just made it clear that that's not an option here. So. You know what you're gonna do. Do it.
From the perspective of your sister, here's what she's looking at. She wants this to conform to some magical image she has of what her wedding would always be, and that storybook wedding includes all her favorite friends wearing identical pastel bridesmaid dresses in deference to her and her magical romantic day. That does not include her sister, insisting on wearing a pantsuit to make some sort of personal statement about Who She Is, and ruining the magical pastel moment your sister has been thinking about ever since she was 9, and with the same amount of critical judgment.
Okay, now I'm trying to see it your way, too. You've been through a lot of crap not of your own making, because of the prejudices of others who have made you feel bad. No one has the right to make you feel bad. And wearing a dress is going to make you feel bad. I'm trying to think of an analogy in my life, and I can! What if at my daughter's wedding she told me I had to dance with her? I have spent my entire adult life not dancing because the very idea of it fills me with horrible horrible dread, and knowing that everyone knows this, I'd feel even worse trying to dance and having everyone watch and think, aww, he's trying to dance isn't that cute, but boy is he awkward, etc.?
I wouldn't do it. And I would hope my daughter understands and wouldn't want to make her dad feel awful.
So, yes, I get your side too. Go to the wedding in pants, and be incredibly gracious about not being in the wedding party, if that's what it comes to.
And yeah, you and I both know what it should come to: You're in the wedding party, looking cute if adorably out of place, in your pants.