Yeah, I was doing some digging and it looks like you were right. The wording is little odd as they keep mentioning varsity competition, but never really explain it fully. So I assume that means that if you transfer, play football at the JV level (regardless of whether you should be at the JV level or not) you are then eligible for varsity action in any sport after 90 days? So if you don't play a fall sport, does your 90 days start when winter sports begin?
That would seem really easy to skirt around. Transfer, go out for a sport you wouldn't play anyway and play it at a lower level, then play the sport you wanted at a varsity level and never go out for the other sport again. It looks like the only people to be hurt would be fall athletes, ie a football player transferring would miss varsity time in football. And yes, I realize a large % of athletes play multiple sports, but most have one they consider their best or favorite sport. My daughter wouldn't be bothered if she missed basketball, but would be crushed if she had to sit out XC or track. Her best friend would be the opposite, she would go out for XC purely to use that as her 90 days.