my experiences may not be representative

I don't think they are, at least not for the US. Over here, being gay is still looked on with scorn, mainly from the religious right who still contend that it's a choice and think it's an immoral abomination in the eyes of God. You don't have a Laramie, Wyoming in the UK. The terms queer and fag are tossed around middle and high schools in the same way as sissy anymore. They're just generally insulting. When the source is filled with homophobic disgust, the terms aren't taken lightly. It really just depends on the tone of voice. Only the most self-confident queer with no fears of bashing would respond wittily to a random passerby shouting obscenities. Of course, in the company of friends, it would be much different.