The second part though, the idea that someone would go to all the trouble to use something like this to track down a bunch of gays is absurd. Why bother doing that when if your a nutter you just go to your local gay bar instead? You know the one that advertises to attract all of those gays?
I believe you missed the point. It's not a question of being possible to simply go to your local gay bar and track down a bunch of gays. The fundamental issue is that, with this, the nutters don't need to go to your local gay bar at all, because someone else happened to put a system in place that is able to generate a comprehensive list of all self-declared gays anywhere in the world. So, these nutters can easily get their hands on a list of potential targets which is much more extensive and thorough than any list they would otherwise be able to compile.
And, suffice to say, this is a recipee for disaster. And not just for gays. Imagine, for example, if Facebook existed in the 1950s and up until then there was absolutely no problem in being a member of the communist party, let alone being simply supportive of that organization or even a friend of any member of the communist party. What would happened if J. Edgar Hoover had access to the names, addresses and social network of anyone who ever joined a communist interest group in facebook, or anyone who ever clicked on the like button remotely related to any site which was pro-communism?
So, the ramifications are deeper than simply having alternative methods to gather information, and much more serioius at that.