The lady that yelled the word at Trump rally meant the later when using it to refer Senator Ted Cruz. Since he's not a female the vulgar form would not apply.

Using the word PUSSY: It’s only vulgar if you want it to be.
Using the word PUSSY: It’s only vulgar if you want it to be.
pus·syˈpo͝osē/Submit
noun noun: pussy; plural noun: pussies; noun: pussycat
1.informal a cat.
2.vulgar slang a woman's genitals. offensive women
in general, considered sexually.
NORTH AMERICAN informal a weak, cowardly, or effeminate man.
Here's the way it went down: Excerpt Via Vox
Trump was criticizing the Texas senator’s unwillingness to support widespread uses of torture when a woman in the audience called Cruz, Trump’s chief rival for more conservative voters, a "pussy."
NORTH AMERICAN informal a weak, cowardly, or effeminate man.
Here's the way it went down: Excerpt Via Vox
Trump was criticizing the Texas senator’s unwillingness to support widespread uses of torture when a woman in the audience called Cruz, Trump’s chief rival for more conservative voters, a "pussy."
Then, amazingly, Donald Trump
repeated it so the entire crowd could hear.
"She said — I never expect to
hear that from you again!," he told the crowd, in mock disapproval. "She said: 'He's a
pussy.' That's terrible."
Now, technically it was the
supporter in the audience who called Cruz a pussy, not Trump exactly. Similarly,
at the event in New Hampshire, Trump polled the crowd, asking, "Can she
stay?" According to the Washington
Post’s Jenna
Johnson, who witnessed the event, the answer was a resounding "yes."
(The woman, later tracked down by Mic,
said Trump has "the balls the size of watermelons, whereas [Cruz’s] got
the balls of little grapes.") The exchange went viral on social media.