Here in Canada it is quite mean to call someone that. I don't know the reason for this. Queer is also not acceptable unless you are one. The term queer is still not fully "reclaimed" by the gay community. Proper terms are their LGBT title such as Gay or homosexual.
It's extremely derogatory, and used quite often to bully, abuse and throw out gay people in today's sociery. It is every remedy harmful, and sadly, used as a slang term to try and make teenagers feel edgy and cool. However, it's still a slur, and it still hurts a lot of people
A word's power is in its denotation and cultural connotation. I can attest to the fact that in the United States, it's absolutely derogatory. The same is true in Canada, apparently. I know in Great Britain some people do still use it with the original meaning in mind, but I've heard it's sometimes used to attack gays there too. Overarching message: British people are homophobes.
Here in the UK, it used to and partially still does refer to a cigarette. The association with gay people is somewhat of a US import. So we practically have two definitions, simply because we use the word in two (or more) different ways. The use of the word seems even more liberal in the US, so I can't see why it must still be held to mean a single thing.