Trans women are rare, and transition dramatically reduces muscle mass and other attributes related to performance. In fact, trans women typically have a lower testosterone level than cis women due to hormone treatments. There's absolutely no reason to believe that allowing trans women to participate in sports would prevent cis women from being able to compete. Trans women have been allowed to participate in women's Olympics events since the early 2000s, and not a single one has won a gold medal. You use the term "biological males" to refer to two completely different sets of people, which is dishonest and despicable.
My point is, there are options to explore besides an outright ban. For example, a trans woman that goes through HRT will lose some of the advantages of her birth sex. However, she might still enjoy the advantage of the male frame, hence my suggestion of an additional penalty.
A unisex league as you suggested could also be a posibility, and one could think about introducing not only weight classes, but testosterone classes as well.
The reality is that female leagues was a cultural hack that worked well enough in the 20th century. But in a world where we recognise that neither sex not gender fit neatly into binary categories, it is impractical to assume that we can fit people into two sporting categories.
Before the higher level of testing, there were plenty of rumors that fighters would overtrain (or cycle on steroids) to the point of plummeting their testosterone levels to be given a TRT exemption. By the time their baseline levels recovered by fight day, they could still be on TRT