I have had, and still have, mixed feelings about surgical requirements. On the one hand, I can see that having a strict surgical requirement eliminates certain problems and confusion. On the other hand, most, if not all, of said problems arise from people's unreasonable fixation on genitals as absolute categorical determiners. If people weren't so obsessed with genitals, then agencies probably wouldn't be, either. While people ARE so obsessed, we will keep running into ugly situations that could "easily" be solved by a surgical requirement. But what an ugly, insensitive, and discriminatory solution.
The more we push the envelope, the more likely people are to become used to ambiguity. But it's going to take some time, especially in America, where the Puritan heritage still holds sway.