Dear E.,
Congratulations, first of all, for being a strong single mom with a lot on your hands! It sounds like you've got a full plate, and you're doing a fantastic job handling it all.
On the question of your son, I am the managing editor of an academic journal of women's and gender studies. I'm not a scholar of gender expression myself, but I've edited and fact-checked more academic studies on the topic than I can count. There is a very strong scientific consensus (and by scientific I mean rigorous use of the scientific method) on the topic:
Gender identity can't be externally imposed.
Let's say, just for example, that there's a little girl who was born to be a sporty, spunky, fun-loving tomboy. This girl's parents can insist that she wear only pink, they can sign her up for beauty pageants, they can sign her up for the debutante ball, but she's going to sneak out, play soccer, go fishing, etc., with the guys. It's who she is. If her parents break her fishing rod and burn her soccer jersey, she may become a sad, bitter, angry person, but she'll never be a girly-girl.
It's the same thing with guys. If your son's sensitivity, intelligence, and wonderful artistic imagination lead him to appreciate how truly beautiful girly things are, then those are wonderful qualities that, yes, may lead to some real challenges in life, but they just can't be rooted out of a person.
My recommendation, honestly, is to keep doing what you're doing, but with one caveat. Sure, buy him train sets, etc.;, if you want to, and sign him up for a sport -- my brother and grew up without a dad in the house, and he developed wonderful role-model relationships with a series of coaches. BUT, if you make those things available and he keeps playing mermaids, *let him know you've got his back!* More important than encouraging to play like a guy-guy, make sure he knows how to stand up for himself! Tell him you love him for who he is (sounds like you're already doing that -- so go you), call the principal to complain if there's any bullying at all, and bring your sweet, precious, sensitive little guy down to the karate dojo. You guys will be fine :)
I hope this helps!
Mira