It seems to me like the admins were trying more to prevent any discrimination rather than to cause it. You can still write "homosexual" can't you? I mean the word "gay" would more likely be abused by players and used as an insult if it weren't censored. This way people can't abuse the word and calling someone "homosexual" doesn't have that certain flare although it's still grounds for discrimination.
On one hand, "homosexual" takes way too much effort for most trolls to type it out, and on the other hand I'm not going to type out the word "homosexual" if I'm talking to someone about their sexual orientation because it's too much work for casual conversation. So it kind of goes both ways. (no)
I'm against banning words in general, so I'm against banning this particular word as well. Ban the people who use words like that in inappropriate context, don't ban the word. The word's neutral. I don't want my vocabulary to be shortened due to someone else's immaturity.
I've taught myself not to use it to troll, flame, or bash others users. Gay means one of two things, and I do not use it otherwise.
However, the vast majority of internet users have not taught themselves such maturity. In light of that, I would ban use of the word, because you can be pretty damn sure it's not going to be used for what it is, it's only going to be thrown about to hurt others.