Why does the race that doesn't pass the test during 'Judgement Day' gets eliminated?

The advanced alien race is basically committing a genocide. Why not just deny transcendence? I think I have the answer.

The judgement day is performed by an empire that is trying to colonize other races. The ones it can intergrade (in other words are compatible with them) are given transcendence. Others are viewed as unstable and therefore a threat.