Puberty doesn't play a role in this discussion because a person's identity has nothing to do with sexuality. Using the word "encourage" is pretty shitty in this case, as it makes it sound like the parents are pushing the kids to make a decision. It's not something you should encourage, but it's something the child should know about and something that should be supported in case the child feels that way.
A 3 year old has no clue what a boy or girl even is. So its one thing to just play along until the child gets older and understands, but even doing it that will just confuse the kid even more by the time he is able to understand whats happening. So if a kid has no idea whats happening and the adult is going along with it then yes that is encouraged behavior.
At 3 years old, kids want to be firetrucks and mermaids and princesses. They know same about sexuality so the adult going with it is just harmful to the kid.
It takes genuine talent to see greatness in yourself despite your absence of genuine talent.