I don't think being singular or peculiar is a bad thing at all. The second definition is slang. I don't choose to use that as my definition. So I can see how there's some objection. The word exists in the heterosexual community too - if you're different in any way, if you don't fall into the mainstream.
People think of that as a bad thing.
And gay people have learned to internalize put-downs. Let me look up fag. A bundle of sticks. In taking a word that has been used against us, we are essentially neutralizing it. The word before has been used against us.