I think we are close to the right answer, but there are still too many barriers.

It is, for example, reasonable to ask a trans woman to be on gender affirming hormones for a while before competing as a woman. It is reasonable to ask a trans man to provide a doctor's note so as to get an exemption from the rules against taking testosterone...it's NOT reasonable to make him jump through a year's worth of hoops to be allowed to compete in a coed sport in which testosterone provides zero advantage! (This happened to a trans man equestrian of my acquaintance).

Also, there have been precisely ZERO instances of a cis man pretending to be a trans woman to compete against women. It's as much of a bugbear as a cis man pretending to be a trans woman to rape cis women in a public restroom.

The right answer is a balance, and also, sports aren't fair anyway. I mean, elite athletes have some kind of genetic advantage and/or the privilege of being able to afford to train at that level.