You have to start by asking why men and women compete separately. It's a wholly arbitrary decision. Some women can beat some men at every sport. So why not just let everyone compete together? Once you answer that question, you can then ask "How does a trans woman" fit into that reasoning? I would argue that the separation of the sexes exists solely because of statistical differences, so it makes perfect sense for the statistical advantage trans women as a group have over cis-women to result in trans women being disqualified from women's sports.

Yes, it is likely (again, it's only statistics) that a trans woman will not compete successfully against cis male competition, just as I, a 5'10" cis male of no particular athletic talent, cannot compete successfully against serious male competition. And that would be true even if competing against the more talented men were "my dream." It's not the world's problem that the accidents of your birth make your dreams unachievable. Being born in my body disqualifies me from playing point guard for the Lakers. Being born in the wrong body disqualifies Lia Thomas from being an elite swimmer. Life goes on.