I really think you missed the points that people were making. We aren't talking about the PC brigade trying to revise medieval history to make it a happy clappy gay paradise
Its that a lot of people are taking a view of homosexuality which is several hundred years to late. Some of the possible events people are talking about sound really interesting: love affairs with foreign nobles, the ever present possibility of disgrace, all that love that dare not speak its name stuff. Sounds really interesting, but also like it belongs in the salons of Paris centuries later.
The really key thing is that the idea of homosexual identity is anachronistic. People wouldn't have viewed someone known to have engaged in homosexual acts as "a homosexual" (and I don't just mean the word is modern), nor would the man himself. Why would they? The thought simply wouldn't occur because the whole frame of reference didn't exist. They, and himself, might regard him as someone who had sinned, and if powerless he might face a chance of brutal punishment. But there was nothing particularly special about the sin in question, it was a sin of lust, but it didn't form part of his identity in the way it would in later centuries.
I'm nearly always for gameplay above realism in Paradox games. But when it comes to what are essentially flavour events, I think anachronism should be avoided.