There isn't really anything wrong with being transgender in a setting where magic can literally make you into a girl without a lifelong dependency on immunosuppressant medication and never-ending post-operative care for a cronenberg fleshrending surgery.
I never liked this argument for tranny inclusion in fantasy. Not because it's ideologically tied and not arguing in good faith, as is often the case, but because if you think about it for more than two seconds it's stupid. In a fantasy setting where magic is common and used by just about everyone you might say that people could switch gender at will and people would think little of it since they are used to magic. Fine, but now explain why everyone isn't looking like supermodels if people have access to that sort of thing. Why aren't all the men looking like gigachads and why aren't all the women looking more voluptuous than Venus? If magic gives you physical changes like that easily why are there still manlets around and why are there people that look old?
It's just an excuse to get a fantasy game to be more like west coast America, with trannies on top of the zombie hordes and orc riots. But if it was actually taken seriously it'd totally change any setting into bio-horror. Why wouldn't a fighter grow a carapace instead of having a wizard nerd cast stoneskin on him every combat encounter while stealing his XP? If you could mold your body as you wanted you could copy someone else and use that for infiltration, are there things like metal detector barriers that detect magic influence on the body instead? Radicals might turn people into human bombs. There are endless consequences that would have on a society and given the radical changes to the human body required also have many applications outside of creating fully female transbians. Where are the hulking supersoldiers that guard the cities? What might women do to compete with each other if the limits were set in the flesh? How might a powerful ruler punish his enemies if given access to such transformative magic?
The people that use this argument above don't actually care about the setting, they just want current year America. It'd be cool if they were serious about it instead.