First order of business - "If they’re classed by gender which is determined by chromosomes present there would be 2 divisions." .
This is simply not true. Although very rare there are several other chromosomal combinations that occour in humans. Hopefully you can accept that and see that it does make sense.
For a moment lets ignore that and discuss the vast majority of people.
I think it makes perfect sense, of course

If you were asking for my personal opinion of how I wish it was I would hope that the two division model could be put in place, it's the most simple and best on paper ie the "cleanest" logically.
But humans are not 100% logical, there are feelings involved. Make no mistake about my personal opinion though, if we get right down to the nitty gritty, facts trump feelings but in this case I see no downside to taking feelings into consideration. Also for the record - Y'all can do whatever you want and won't hear a peep from me unless it affects me negatively. I can argue what some would say is a crazily low bar for where that starts though. And in the y'all can do whatever you want sphere, don't expect me to support it or to play along and if you try to compel me to participate it may get contentious real quick, I gave you your lane stay in it unless you want that fight.
Talking bout every being on the planet and all subjects not you or anyone in particular.
Back to a direct response, the feelings factor.
Particular to this subject I see two things as the main consideration.
There is a group who has a concern that everybody be allowed to play. I'm down with that.
There is also a group that has a concern for keeping the competition amongst a reasonable group for reasons like safety, fairness of oppourtunity, development etc
So if we consider feelings I've not yet heard an arguement that defeats my model, frankly what I see is usually a hysterical meltdown where all common sense flyes out the window.
In my world if the inclusion of feelings as a factor results in failure to agree then we must we must disregard it and default to logic, ie what makes sense.