There are so few people that fall into that category that they wouldn't be able to form a comp, so they just end up getting excluded and missing out. Plus it would just leave them feeling ostracised and different (which they don't need any extra help with).
People who are actually transgender aren't just making a "choice" to become the opposite to their biological gender, that is the gender they genuinely feel they are and they feel like imposters in their gendered body. The "choice" they have is to live with that feeling or do something about it. To be included and welcomed by the gender they actually feel they are would be huge for them and what does it actually cost? Bugger all.
Sport has never been an entirely level playing field. There are 100kg kids playing against 45kg kids in some comps. There are kids who are naturally stacked with fast-twitch fibres and kids with bugger all. No matter how hard some kids work they are just ectomorphs who will never compete at the highest levels in strength-based sports. Genetics make a massive difference regardless of gender. At the competitive levels of sport sure, you put in restrictions on testosterone and other hormone levels in the same way that restrictions are placed on performance-enhancing drugs. The talk about increased muscle mass in men largely derives from hormones like testosterone. You take away the testosterone and they will not be buidling or maintaining muscle mass like men do - nothing like it.
Otherwise if a majority of women are happy to welcome transgender competitors into their competitions then good on them. Their choice, not mine.