they should split it into several divisions depending on your levels of certain hormones, similar to how fighting sports have weight divisions. Natural hormone levels are a huge determining factor in sports even among people of the same birth sex. Maybe they should even allow people to supplement hormones to bring them up to some standard levels for the division. The vast majority of people are basically excluded at birth from ever competing in eg. the Olympics because no matter how high their personal drive/spirit, they just don't have good enough body chemistry, and is that really fair?
The issue with this approach, though, is where do we stop? Hormone levels are a determining factor, yes. But what about, for example, height? You could be the most talented and skilled basketball player in the world, but if you're 5ft tall you'd never make it as a professional. How about if you have two really dedicated sprinters, both with perfect diet and training regimen, but one naturally has significantly more fast-twitch muscle fibres, and wins every time. Genetic and other natural variations account for at least a proportion of elite sports performance.
I suppose we could look at the paralympics to get some context. There are many different classifications of competitor, leading to many different versions of each event... but wherever you have bandings, you have some people at the top end of the band and some at the lower, some whose disability means they're on the border of bands A/B, and some who are on the border B/C... if they both get grouped as 'B' and have to compete against one another, then is that fair?
If the aim is to ensure a level playing field that removes all genetic or other innate advantage, then we don't just need a few more separate divisions of competition, we need as many divisions as there are people. Even if we tried to level it up by permitting hormone supplementation, that would only go so far, and would highlight the other physical factors.
I'd argue that elite sport is—and should be—about who is the best, not who makes the best of what they've got. If the fastest and strongest have certain innate physical advantages, and they have made full use of those advantages, then they deserve to be considered the best. If someone is biologically a woman, they should be allowed to compete as such, regardless of hormone levels (excepting of course illegal doping).