This is where it's good to point out that sports participation is not like voting, it's like driving. A privilege, not a right.
That said, the male/female classification method exist because there is such a vast difference in competitive abilities between men and women at any "level" you choose.
We could of course have such a "leveled" system, where at a given World Championships, there would be an "A" competition, a "B" competition, a "C" competition, a "D" competition.......and eventually we'd get to a classification where women would start to qualify. Highly inefficient, by my way of thinking. Swim meets would last entire months.
I cannot imagine a more misogynistic way to destroy women's competition. We'd be right back to the days when women who wanted to be athletes were discouraged by their parents and peers.
"I guess that’s worth having? A built in admission of how women are inferior?"
Seriously now. If you study the anatomical and physiologic difference between women and men, you find that evolution has provided a very common thread, that being that a man's anatomy and physiology is optimized for speed and strength, and a woman's is optimized for childbearing. That's what all those millennia of being hunter/gatherers did to us. Men who could kill the bear or the lion and drag it home lived, those didn't died. And women whose bodies were less optimized for childbirth died more often during childbirth than others, over time leading us to where we are today. Tough to fight mother nature. :-)
So, because of all that, we are where we are. And even though I was a top level swimmer back in my day, just a tad slower than the Olympic qualifying times, I never for a moment considered myself "inferior" to the guys. And I wouldn't trade my Gift of Life as a woman for being a faster swimmer for anything. I suspect you understand that point of view.
Here's my solution. The genetic guys compete against the genetic guys. We acknowledge them with their own set of awards, kind of like how at a marathon, everyone competes together, but when the awards are handed out they're handed out not just to the young and highly trained top finishers, but also the top men and women in their 40's, their 50's, their 60's.......etc.
That way you don't disincentivize women from engaging in activities which are beneficial to them.