I've had some gay NPC's . . . in particular, the heir to the throne is gay and not particularly interested in governing -- inspired by the historical Edward II of England, as seen (a little exaggerated, right about his sexual orientation) in "Braveheart".
That makes for some interesting political complications. Insiders know about the "problem", but the people don't know (they'd be upset). The king knows his older son is gay and not interested in ruling, but basically a decent person, and his younger son is straight, but far too interested in ruling -- and of questionable moral decency.
So, the succession solution was a political marriage for the older son to a reliable, smart, LG princess who wouldn't mind a sham marriage. The PC's managed to negotiate that, which actually brought their kingdom into a war, but in a great for the campaign way.
My point is . . . characters can be gay without it being "Will and Grace" gay. I play it like "real life" as I've seen it, which is that gay people are basically the same as non-gay people, with some interestingly different plot hooks. One decision for a DM to make is how accepting or non-accepting of homosexuality their campaign world is.
My campaign world is probably something like 1950s New York -- everyone knows homosexuality exists; some communities are "out there" and accept it; most people think it's scandalous; there's not a lot of official repression but there's also no concept of gay rights -- gay people mostly just want to be left to their own business, and other than gossiping, most people are fine with that.
I once worked with a guy who was in Vietnam with the 1st Cav in 1964, at the very start of the ground war. He said, during the gays-in-the-military crisis in the Clinton Era, what's all the fuss about? Of course there have always been gays in the military. In his outfit, the solution wasn't to TALK about such an uncomfortable subject or make rules (1964 was pre-hippy era), but to switch from 2-man tents to 12-man tents, so there wasn't so much of it obviously going on. With 12 guys, people weren't sleeping together anymore, and as long as they weren't open about it, nobody cared.
