It's a more complicated issue than people often give it credit for, and the best solution probably varies a lot by sport and level. However, it has to be pointed out that none of these states enacting bans this year are having any trans athletes at all, much less having a bunch of them dominate women's sports. It's a totally made up issue.
And before Republicans claim that that domination is about to happen if they don't do something, remember they've been saying this since Renee Richards started competing as a woman 45 (!) years ago.
Fun fact:
Renee Richards was outed in 1976 by reporter Richard Carlson, father of Tucker Carlson. (An example of how the opportunistic bigot doesn't fall far from the tree, I guess.)
I think you're absolutely right when you say it's "a more complicated issue than people often give it credit for"; at this same time, I think much of the furor is a tempest in a teapot brewed by Republicans purely for political advantage. We're mostly talking about
kids playing sports.
And yes, when it comes to sports, genetics can provide an advantage. And when we get past the mountains Republicans are making from molehills, that's a part of what this is about for conservatives. Not gender, or sexual identity, but "your genetics give you an advantage". I cannot help but wonder, if Republicans are not stopped here, where will they go next? Will other athletes be banned from unfairly competing against the presumed ideal genes of the GOP's sons and daughters due to some deemed unfair "genetic advantage"? (And what color would the skin of those so banned be likely be?)
Yes, that's a pure hypothetical, but does it really seem impossible from a bunch of bigots who
want official child genital inspectors? But that would still be no real solution - genetic chimerism exists in humans (at unknown frequency), and has already impacted sports in
at least one documented instance going back to the 1960s. As another example, another well-known transgender woman from the same timeframe as Renee Richards, Bond girl Caroline Cossey,
has XXXY chromosomes.
It is a complex issue, but the Republican approach is near orthogonal to both reality and the interests of the children involved; for them, this is pure political opportunism (and a chance to flex their bigotry and xenophobia).