The issues with this theory is that it is unfalsifiable.
The main limitation is that it can’t be scientifically observed or tested.
There is no way of observing, quantifying or measuring a child’s progression through the phallic stage as it’s an abstract and hypothetical concept which critics have questioned the existence of.
There is no way of verifying if a repressed fantasy that triggers gender dysphoria occurs unless independent, objective evidence is available.
In other words, most of the theory has to be taken on faith which limits its validity.