OK, last time I'm answering this, with a caveat it's my opinion, I'm not in power and I'm as entitled to an opinion as anyone else.
I think we should do two things: 1) make the GRC a necessary part of recognising someone as trans. Get rid of the spousal veto, make the GRC part of a treatment pathway that's granted only when other treatable mental health conditions have been excluded and sexual motivation/offending isn't present. People would need to declare the GRC - so rather than a binary M/F option there is a third Trans option on official documents. Increase the gatekeeping, basically. 2) increase options to help trans people integrate. Third spaces, making it unacceptable to persecute them, celebrating the trans identity as something separate to birth sex.
Keep the way it works currently (people with a GRC to be treated as birth sex) but support service providers and employers to apply sex based exemptions accurately and effectively. Strengthen the EA to give women more legal options if that wasn't done and they were forced to share a single sex spaces with a TW. I suppose this looks akin to treating transgenderism as a disability and making "reasonable adjustments" so people can contribute and be happy.
I think this would reduce the ability for people to claim to be trans for nefarious motives. I think it would protect women better than currently. And I think it allows trans people to participate in society and be protected from violence.
Of course trans people are going to hate it, and "option 3" people probably will too. I think its fairer than a "you lost, get over it" option that is either totally gender based or totally sex based.
It is much harder to define or defend a middle position than either of the extremes, so of course people disagree and of course there are holes. But if I was in charge, this is what I would do.