"I see the rules changing quickly to include the phrase "genetically by birth." "
And if a person is XXY, they are genetically a woman, but likely has a penis.
Your argument fails at every level, since transgender people HAVE genetic markers for both genders, Regardless of their -------- (not all are XXY, but they at least bear some genetic traits for both genders)
The facts of gender are complex and involve genetics, biochemistry, psychology and several other sciences. The fact that some people are afraid of this does not change the facts. This contestant is a woman. End of story.
Now why she's participating in such and out dated competition is beyond me, but that's a different issue.