My transition leave is being denied (on the basis that I should have leave during taken several block leave periods). How can I fight it?

Slow down, the world has not ended.
One: yes the CSM made a statement of exasperation.... You on terminal leave for 60 days, you will be counted against his unit rolls for that entire time.. yes a known loss, and yet still a body to be accounted for.. Subject to recall from leave at any time so deemed required, UCMJ, property accountability, stop loss for deployment (I had SM pulled from terminal leave for all three reasons)
And it sucks as unit leadership to have to account for a body they will never see or make use of as a resource again..But thats the issue the command deals with when you have that much leave.
Additionally he was probable expressing confusion as to how you could have accrued that many days

The commander, made a statement, based on what he likely thought was a "right" position and authority. I'm thinking he will find his position and opinion regulated for him in due course.
And likely that will be the catalyst for him to create a policy that commanders need to be observant of accrued leave for anyone inside 180 days of ETS, and to require SM to take leave so that that they have no more than XX days at ETS>

So what to do now?

Take your leave form denied to the commander again, ask him again for reconsideration, based on no policy or regulation prohibiting you from taking 60 days of transition leave..if no, ask that they do so in writing with justification, if they wont, document the conversation yourself..,

If denied again, Make an appointment with the IG, start out with Sir I have been to the commander twice and confirmed this is his position, "Its not a complaint" but before I contact my congressmen naming the post, Troop , and company commander I wanted to make sure this is a valid reason for denying my leave? Sir that is all Im asking, nothing special, no waivers, no options, not exceptions to policy... just to take my acquired leave as I transition from the service..
At that point hand over COPIES of everything and ask that they provide a written opinion of the legality of denying accrued leave based on the commanders legal standing of "I just dont wana" Ask them if they could get to this in the next business week, so you have time to cancel the congressional inquiry being forwarded.. as that is your desire, to handle this internally..

Thank you sir, look forward to hearing from the Ig's office,.

Id bet you have an answers in just a few days
I also bet you get tasked to every shit detail that does not interferer with TAP classes required by law and regulation.

I don't have any advice in this case, but I wonder if it's a coincidence that the unit is loosing a soldier after seeing how the soldier is being treated on ETS?

I'm sure the Army "counts noses" differently than the AF does but when I was the Readiness NCO for a deployable unit, anyone who was a KNOWN LOSS (ie: ETS within 120 days) was already reported as a vacancy. If the CSM and/or CMDR is saying "I have to have this one guy or my mission fails", then they have already failed IMO. I'd talk to your S1 and possibly your IG office. They might be able to give you options or point to the appropriate policy/regulation/rule that governs the situation.