I agree with that definition. Notably, it excludes the (equally hentai) definition of dickgirl, which is the same, except it omits female reproductive organs, and often includes balls, where futanari generally does not. Also, futanari are almost universally coded as "female, but", but for dickgirls, "male, but" is not unheard of.
I'm against this suggestion, though. The theoretical gain for people who are icked by anything that goes beyond "definitely 100% female... but with a dick" is outweighed by the practical fact that of 103 of 441 stories in the Transsexual category tagged futanari, few authors will bother switching, and it'll just make futanari stories harder to find, not easier, because you'd either have to search 2 categories, or search only by tag.
I don't think it's necessary, either: the word 'transsexual' has a narrower definition in the real world, of course, but on an erotic story site, it serves just fine as a general "there are NOT only two genders" category, imo. Maybe we could come up with a better, more all-encompassing name, though?