I think we are ignoring something very important here.
Women in prison are given some important privileges men are not. Most important of these is the right to wear their own clothing, which applies regardless of security classification. Also, prison staff are trained to address women prisoners by their first names.
Things like this might sound pretty trivial, but actually they can be very important to the way people experience prison. The reasons behind these distinctions, as far as I can tell, like in the differences between male and female psychology. Women are likely to do better in a more relaxed environment that focuses on caring for them and building their self esteem. The militaristic and overtly punitive male prison environment is, on the other hand, likely to be very harmful to women.
My point is that, if trans women are psychologically more similar to other women than they are to men, then surely the more liberal regime applied to women would be more appropriate for them?