The conversation is the Duncan Idaho ghola, just back to life from 3000 years earlier, upset that two women were kissing. The Moneo tells him to get over it.
Dune gets criticism for having the Baron be gay. But he isn't gay, he's a child molester. Feyd is a rapist that prefers adult women. No character in Dune comments on how the Baron being gay is repulsive, instead focusing on how being a murdering sadist makes him repulsive. Whatever Frank's relationship with his son Bruce was, we don't know the full extent of their conflict and if it was entirely based on sexuality or other disagreements about life choices. So the homophobe label seems to largely be a product of outside views of his relationship with one person, and clumping sexual violence in with being gay - as if they are obviously connected (which is a homophobic trope in itself).
Most SF books have no gay characters, and the only real commentary we have from Frank on the subject is how Moneo seems like the rational party, disapproving of Duncan's disgust. If Frank wanted to make a negative statement about gays, he certainly had many opportunities to depict antagonists that way, and did not.