The string you need to pull to unravel the whole knot McKinnon creates here is this assertion:
Women are not, in fact, subordinated or oppressed by our bodies.
I don't think that any gender critical feminist writer would ever argue that women are subordinated or oppressed BY our bodies. That is a strawperson!
The oppression and subordination of women is, however, historically based on the average differences between male and female bodies:
First, the fact that female bodies reproduce the next generation (and the fact that most men want sexual access to that specific type of bodies) makes having societal control over women desirable for societies.
Second, the fact that the average male body is stronger than the average female body, a difference which is further magnified when the latter is pregnant or recovering from giving birth, has historically meant that the subordination of women has been feasible just on the basis of brute strength.
(This does NOT have to mean that individual men or even individual communities forced subordination on 'their own' women as a class, because the differences in average strength and the power of physical aggression has also meant women's exclusion from warfare and tribal disagreements, seen as the need to protect women and children, and because pregnancies and the need to care for small children kept most women away from the public spheres where power was bargained, negotiated, and fought over.
How these arrangements have changed over time, with developments in forms of economic and political arrangements (moving from hunter-gatherer communities to small stationery farming communities to city-states to large states etc.) and with changing technologies is also crucial to understand:
Physical strength and the limitations of frequent child birth have diminished in importance, and so the maintenance of the subordination of women has become more dependent on the gender norms, rules, and stereotypes McKinnon both appears to frown upon and also to see as the proper replacement for sex. I see this as reason to question the concept of gender, not to use it to erase the sex-based nature of women's oppression.