I think you make some empathetic and meaningful points, which I also agree with. However, I am not sure about the plausibility of attempts to establish clear boundaries between our normative sex and gender categories.
Going through the history of medical research in regards to sex difference during the 20th century has revealed a paradox, which is this: The more "we" (i.e. we as a society, placing pressure on scientific processes) attempt to clearly establish a dividing line or determining factor that tells us definitively if one is male or female, the less clear it becomes. Brains? Not definitive. Chromosomes? Not everyone is XX or XY - and even if they are, there are always the epigenetic and environmental factors that have a tremendous influence on human development, including *hormones*.
By establishing limits explaining that "x amount of testosterone is too much for a normative female body" is really based not on science or any kind of altruistic or ethical conclusion (medical or otherwise) in the interest of the health of individuals, or the greater good of the competitors. It is based on the fundamental cultural influences of our broader societies and, in this case, the sport governing bodies. These institutions are our political and cultural preferences/values in a concentrated form, filled with people who are interested in keeping things going in a way that is most optimal for the tradition of the sports. They don't want to have to deal with any of this conceptually abstract gender/sex "stuff". They would rather keep their ways of thinking and insist that there be only two classifications for athletics competition: men and women. This is, in my opinion, a reflection of broader cultural values that are heavily skewed towards believing (yes, believing) that there are/have only been two sexes throughout history, two genders, and the way to tell the difference between them is easier and easier - with science!
My main point is that humans are more like the following:
http://tinyurl.com/jjc6kk3
and less like this:
http://tinyurl.com/gopo8q8
Attempting to make the former into the latter is a messy business, and adds another layer of complexity to an issue already fraught by the influences of the broader "liberal vs. conservative" culture wars. We need to take a step back and really question these fundamental categories (and our assumptions about them being binary and clearly cut apart from each other). In my opinion, that's a first step for us to get to some more realistic and workable solutions to the dilemmas we see with this whole "over-representation of intersex individuals" (or simply women who are on the more masculine end of the bell-curve) in the upper echelon of women's athletics.
Flame away.