If this were true--and if muscle mass and hemoglobin were the only things important for sports--then this would be a good argument.

But it's not the case. Hemoglobin does indeed decrease--within four months even--but although strength decreases by 12 months it is not, at that point, at "levels typical of the female gender", at least not in all muscle groups, and least inasmuch as it has been tested (which is not nearly enough).

Would you like some references? Here's one: https://bjsm.bmj.com/content/55/15/865.long.

Given that athletes can face years-long bans for doping with substances that do far less (see https://www.usada.org/news/sanctions/ for some instances), it's not an "insult to female athletes and their ability to compete" that some women they're competing against might have had high testosterone as recently as 12 months beforehand. If a cis woman were caught doping testosterone even once she could face a ban of multiple years.

The reason that there's no fuss about trans men in sports is because it's not unfair--except to the trans man, but that's his call to try to compete despite the disadvantage.

The reason that there is a fuss about trans women in sports is because it might be unfair, and given how we treat doping, it's quite reasonable to want to be very confident indeed that it's not unfair before inviting trans women to compete against cis women, at least in sports where there is a substantial disparity between cis men and cis women to begin with.