Women dressing as men is a common image in Shakespeare's comedies, going as far back as his earliest, The Two Gentlemen of Verona. Usually, this occurs because the woman in question is in the wilderness or traveling and wants to protect herself from sexual assault.
In Portia's case, she is doing so to save her husband's best friend, not for her own sake. She is arguably the wisest character in the play and the best equipped for this situation in the courtroom, but as a woman, her ability to act is limited—hence her disguise. She is motivated not by material gain, revenge, or even necessarily justice but by love for Bassanio, making her the most appropriate character to defend Antonio, more so than any of the men, who lack this quality.
Portia's "Quality of Mercy" speech can be read on many levels, some quite complicated. On one hand, it could be interpreted as the moral heart of the play. Since the beginning of the play, Portia has been shown as a merciful character in her dealings with unwanted suitors. She is generally fair. Her language in the speech links mercy with God and regal splendor. She also appeals to Shylock's humanity and the general human need to be shown mercy since, by Christian theology at least, no one deserves it:
Though justice be thy plea, consider this:
That in the course of justice none of us
Should see salvation. We do pray for mercy,
And that same prayer doth teach us all to render
The deeds of mercy.
A more cynical reader might claim Portia is being hypocritical, since she is making an argument for Shylock to show mercy, yet when the time comes to show him mercy, it is revoked. And yet again, another might claim Portia is genuinely trying to save Shylock from the consequences of his own thirst for vengeance, at least at first. If she is being hypocritical, then one might say Portia is starting to become unfair, a major development from where she was at the beginning of the play, when she was fair even to her unwanted suitors. If she is not being hypocritical, then this is not so much the result of character development as it is her greatest moment of triumph.