"Thus self-destructs the idea of meaningful competition. How can a woman compete with someone who grew to full stature under the influence of male hormones (bone and muscle structure, etc) even if he has been taking female hormones for the past two years?!? "
Not a really good question. If the woman can't compete, she will lose. End of story.
"she will lose. End of story"
Quite: even if she were the best woman (DNA-wise) in the Universe -- she would lose to a man (DNA-wise), in sports where muscle and bone structure make a difference.
To be fair, they would have to have competition between DNA-women; between DNA-men; between DNA-women who have been redefined as men; and between DNA-men who have been redefined as women. (Four groupings instead of two; and it would be quite easy to get a medal in two of those, it seems to me.) Otherwise, you cannot control for the sexual influences upon the growth and development of the body. OR we will have to just throw everyone in the same pot . . . and women will lose the capability to excel among their own.