Yes it is. Sex is ambiguous (can't easily be determined by external genitalia) in 0.018% of intersex individuals (https://pubmed.ncbi.nlm.nih.gov/12476264/). A flipped coin wil land on its edge in 0.016% of cases (https://journals.aps.org/pre/abstract/10.1103/PhysRevE.48.2547). So effectively, claiming that sex isn't binary because of intersex people is like claiming that flipping a coin isn't binary because coins have edges.

But even if this weren't the case, intersex people have nothing to do with trans people. The vastly overwhelming majority of trans people aren't intersex. In fact, in my research, I didn't find a single example of a transgender person who was intersex. Intersex people are often used to obfuscate this issue and it's completely unfair.

If we were only talking about children's sport I don't think there'd be an issue. At least not nearly as big an issue as there currently is. But as you can see in the article, there are many examples of adult trans women competing against women, and it's also all but guaranteed that there would be "concept creep" from rulings on junior sport into senior sport. I think it would be naive to pretend that the issues are separate. But even if they were, under 18 sports are still relevant for college scholarships.

I agree with you that children, regardless of gender identity should be allowed to play sports. The question is, how do you solve this problem without completely invalidating the concept of female sport? Especially when children (rightly) aren't required to take hormones at all at that age. It's simply male bodies competing against female bodies. Affirming trans children is important, I agree. But so is empowering girls. The right solution should achieve both of these things.