I can understand the controversy here. However, it's just that, a controversy. The fact remains that Fallon Fox is supported by a fair portion of the MMA community. Hell, they even have a screening program specifically to include transgendered fighters. Furthermore, transsexualism isn't as simple as moving from A to B and all biological differences. Comes with some biological disadvantages too. Anyway, it's not like they banned her from competing.
I can admit that not every situation is exactly the same; however, if such a point comes that Fallon Fox's performances are more legitimized with time, I'd hope there'd be less barriers to including TG people in competitive sports.
Either way, this doesn't mean we shouldn't recognize the gender of transgendered people. Even with the controversy, freaking MMA organizations managed to do it. xD
If the OP had just said this, I could have agreed with him