The reason sport is separated generally by sex once athletes hit puberty is because hormones come into play. Testosterone is the advantage that males have over females in terms of growth of muscle and power. If her hormonal makeup is as a male (remembering that it is the hormones that causes this difference in ability) then how is it fair to compete against others lacking this advantage.
The lactic acid advantage with Phelps is a good point but it’s a natural advantage, just the same as tall people are naturally faster swimmer as they have more pull and shorter people are naturally better gymnasts as they have a lower point of balance and their bodies are easier to flip. Unfortunately having a natural lactic acid advantage is just the same benefit as naturally being suited to a certain sport.
It not fair on CS but unfortunately her natural advantage is a determining one.