@Madaligned people do have a right to block whoever they want, whether based on imagined narratives or not, as you say — the problem is that TBS is designed to specifically be an anti-racism block list and it's also part of a larger group of projects that want to integrate themselves into Mastodon servers themselves, and TBS was designed to be a widely adopted block list that basically everyone will use. It becomes much more problematic if the block list that's supposed to be very commonly used across the whole social network, and kind of be the authority on preventing racist harassment, is adding instances to their list for arbitrary reasons. So yes, individuals get to block whoever they desire to, for whatever reasons they want to, but that doesn't really go for people who are trying to set themselves up as authorities on who should be blocked.
And believe me, there's plenty of criticism of the other people behind TBS. One of my biggest concerns with it is that one of the biggest servers behind it is mastodon.art, whose admin is Welsh Pixie, both of which are known for spreading false accusations and narratives and putting people on fediblock — so not just a personal block for themselves, but an announcement that everyone should block! — for really absurd reasons. Likewise rage.love has also had some problems with blindly forwarding accusations based on hearsay which they then later had to retract. And Ro has deferred to mastodon.art and Pixie multiple times, explicitly, which he hasn't done for other people or instances, so it seems like he's taking queues from her.
And yes, Ro is not the main or only person behind TBS. The reason he is getting so much criticism is because of the outright transmisogynistic things they have said, the way he can't seem to take criticism or questions about who is blocked or why from people who are asking in good faith, and the way he has levied rhetoric against people who are criticizing his initial handling of building the list or the way TBS is set up. If he hadn't engaged in very hostile rhetoric to everyone who was criticizing him over his mistake, then the mistake would have been fixed and everyone would have moved on. The reason everyone got so mad at him isn't for the original mistake at all, but for the way he handled it when people brought it up. Anyone who wasn't sufficiently nice about finding themselves on this list, which could spread noxious rumors about them and end up with them isolated, and asking for him to take them off, was met with anger.
And I don't think it was wrong for people to have initially gotten angry over a bunch of innocent trans instances being listed for no reason on his list, with the tags auto generated as hate speech and bigotry, even though that isn't even why they were in the original block lists he was pulling from. Trans women are very often the target of these kinds of block lists and isolation tactics. When we found out it was a mistake, obviously the thing to do was to stop thinking it was intentional and that he was intentionally transphobic, because it was clearly just a mistake born out of momentary negligence, not malice at all... but again, the reason that the anger with him continued was how he responded to people's initial concern and anger at him for what for all the world seemed to them initially like transphobia.