You capitalize the prefix for emphasis, no? It's really a prefix that's used with nouns without hyphen.
This is still a new word because the transgender issue is still new. When there arise issues of group identity, words like that would inevitably be coined to refer to "the rest." The prefix non- should do too, but, well, it's not as smart looking is it?
I have encountered heterosexual used only in discussions that concern issues of sexual orientation, not so much to pin down or to divide people by labeling them. Similarly gentile is used only in contexts of Jewishness. Generally I never feel being labeled except in official documents, which all persons inside the grid have to bear through anyway. And I don't see a lot of advantages in distinguishing yourself with labels, either as this or the rest.
the capitalized CIS is how people were writing it. You are probably correct about the proper way to write the term. In this case, folks were just identifying themselves this way without necessarily in the context of a specific discussion about transgenderness. It is probably just a fad of the moment. One can hope.