Microsoft just lifted their "Don't Ask, Don't Tell" rule on Gamertag names on Xbox Live today. According to Microsoft, "You may use the following terms to express your relationship orientation in your profile or Gamertag: Lesbian, Gay, Bi, Transgender, Straight."
They go on to say, though that "Other terms regarding relationship orientation are not allowed. In addition you may not use these terms or any other terms regarding relationship orientation to insult, harass, or any other pejorative use against other users."
Xbox Live honcho, Marc Whitten wrote the following on the official site:
"Under our previous policy, some of these expressions of self-identification were not allowed in Gamertags or profiles to prevent the use of these terms as insults or slurs. However we have since heard feedback from our customers that while the spirit of this approach was genuine, it inadvertently excluded a part of our Xbox LIVE community."
So thankfully, there will be no more "Gaybasher9000" gamertags any more. Though it does sound like Chris Holmes can finally use his desired Gamertag "XxXSuperGayHolmosXxX," so I'm sure he's very happy about that. Sadly, this won't stop some ignorant people from giving gay people hell on Live, though.