As usual in reporting, the whole story is not being told here. The rule Blizzard is using in this case was actually brought about by a GBL guild. This was due to a another guild's name, and their advertising, which the GBL guild found as offensive. Blizzard made the rule then that sexual orientation should not be discussed in general chat.
Now, I can somewhat agree that Blizzard did not handle this situation quite properly, but I do agree with their stance.
We must realize that blizard only has two choices here. Either allow it all, or disallow it all.
By this I mean that if they allow GBL to advertise what they are, then they have NO grounds to stop a guild that is all heterosexual, or african-american, or white. Some say this is not a valid arguement, but IT IS. If someone has the right to advertise the sexual orientation of their guild, then everyone else has the right to advertise their guilds "special interest", be it sex, race, religion.
So that brings us back to the beginning.
Do we allow it all, or disallow it all?

Actually, you're not quite right, John. There was no policy stating that sexual orientation cannot be mentioned in game. None whatsoever. The policy states that you may not "insultingly refer to sexual orientation". Nowhere does it say that you cannot refer to sexual orientation. This whole thing started because a GM misinterpreted the policy, just like you have here. Blizzard has since then apologized for the GM's misinterpretation of the policy and is taking steps to ensure that it doesn't happen again. The policy has NOT changed in any way since this incident. It remains the same as always. . . that being that others may not INSULTINGLY refer to sexual orientation. We can, however, mention our sexual orientation in game. . . and if someone insults us for it, THEY are to be reprimanded - not us.

So did Blizz ever come out with a statement about gay guilds in the game? Apparently they were working on formulating a policy.

Thats so ghhhhheeeeyyyyyy!!!!! Queers should be able to have a guild all to themselves and if u ask me, I think thats gheeeyyyyy!!!!

I play wow a couple hours a day, I very much enjoy the break from the daily grind. I don't relly understand the need for 'gay friendly' or any other kind of exclusive guild or group. That is part of the draw for me, no ugly baggage from the real world, no racism, no gay bashing, no religious zealots, just a lot of people having some fun, why do we need to bring all of our crummy real world baggage with us? My guild is about 120 people strong and very diverse as far as male/female and age, as far as race, sexual orientaion, religion I have no idea, ya know why? Because in all the time I've played I have never ever heard it come up, no one has ever said a word and no one wants to, we are just a bunch of people who want to have fun together. It is a fantasy world of care free fun where everyone gets along, I just hate to see special interest groups popping up in WoW, it leads to bad things like politics, racism etc. Let me have my 2 hrs a night of fantasy and lets leave the real world behind. It is after all just a Game.

Hah, it sounds like a couple comments came from people who don't even play the game! I have a level 58 priest and 27 male paladin, and I make it well known my paladin and I are gay.

Like Sara says, this is a case of a GM misinterpreting the rules. Read the rules on the WoW website and it says that sexual orientation is not to be insulted, amongst other things.

its funny that john would say that there is diversity and acceptance in the game. I have found this to be untrue. The World chat is plauged with "thats f'n gay" and " so n so is a fag for being so gay about this and that"....Its obnoxious. I believe that the creation of any friendly guild that encourages acceptance and sensitivity in the face of the many that bring real life issues into the game, should be encouraged. It helps to reintstall the "Fun" in the game for those of us that dont believe that calling things that are negitive gay and people that do something someone doesnt like, a Fag. At least by joining these guilds your guild chat grossly over shadows that of those who could care less about who they are offending.

Ive heard so much whining and complaining from just about everybody about this whole thing....well...Being a christian myself most people assume I preach about God and push my religious propaganda down their throats, but in truth I dont believe their should be ANY guilds promoting or saying anything about the real world...Christian Guilds, Homosexual Guild, or anything of the sort...The main purpose in most peoples eyes of a game is to escape the real world, and go do something fun, so LEAVE the real world behind...WHO CARES if your gay, if your gay great, if not good for you, I have tons of homosexual friends and have talked to them about this whole thing and agree...Their shouldnt be any real world anything in the game...

FYI:
Most of the guilds in WoW are already all-white.

There are far too many in the game who refer to something or someone as gay and mean stupid. A straight friend of mine has taken to telling people to "pick a different slur". This usually gets them to think about what they are saying. Sometimes it makes no difference. I have heard someone call another person a nigger. Several of us jumped on him for it, then found out he and the other person were African American and real life friends. They agreed not use the word in guild chat. I don't care about someone's ethnicity, race, religion, sexual orientation or political affiliation. I don't care if they announce it in general chat. I just ask that they respect that other folks are different and that they keep the game fun for all with no harrassment.

I wonder what people would think of an all-heterosexual guild. Why, some people might think it's anti-homosexual. *gasp*

Possibly, Anonymous..or just stupid. Heterosexuals don't get tied to fences in the middle of Wyoming, assaulted and left to die purely because of their sexual orientation. See the difference?

Leave the real world out of World of Warcraft? HAH! World of Warcraft has so many real life references from NPC (non player character) names to the jokes that your character can say by typing /silly. While we're at it, let's remove the human race from the game, after all, let's leave the real world out of a fantasy game.

But to stay on topic, I could understand the need for a gay-friendly guild. A good portion of the World of Warcraft player base obnoxiously misuses words like "faggot" and "gay" on a regular basis. Even on Ventrillo servers, you can't escape the word "gay" being flung around carelessly. It gets annoying, and having a gay-friendly space isn't so much to ask. The purpose of such guilds isn't to promote being gay or even actively DO anything gay related. The purpose of such guilds are to provide a safe space where you don't have to hear "gay" this and "faggot" that used disrespectfully.