Sinister Supporter, every now and then I substitute teach in the same public school where my daughter teaches.

Not only has my daughter told me about times when children in her room have called other students gay, I have personally witnessed children calling other children (usually males) gay,. In those situations there was no question that these students were saying that the targeted students were homosexual. Sometimes the students accompanied their remarks with the limp hand gesture that supposedly is a "sign" of males being gay. Sometimes they said a particular boy acted like a girl. At other times the students went back & forth exchanging comments "I'm not gay". "You're gay". "No you are." I handled these situations in different ways depending on the circumstances. But I tried to convey the central point that if a person is gay, so what?

To their credit, these students don't appear to tease two boys in the school who appear to be effeminate. But those boys probably ahve heard other students being called "gay" as if that was an insult. I think that has to have some negative consequences even though they aren't the ones being targeted..