Sexuality should not be the main focus of a game. Hetero or Homo.
Of course not, but it adds personality to characters and that helps create a good story.
Not when all 'gay' characters are mincing feminine jackasses, and all 'female' characters are either big breasted ladies with strong opinions, or big breasted ladies in need of a powerful man to save them.
Also, why are all male characters either musclebound patriots, or girlish looking manchildren with the weight of the world on their shoulders?
NOTE: The word all was used subjectively in this post.
Zangief Poison (never actually gone into, but given most people can't get sexual preference and gender identity separated in their heads, and given that Capcom can't even settle on where she is on the transgender scale, at some point in time she has to have qualified)
Hell, I can hardly think of any gay characters that are horrible stereotypes.
Venom from GG, Ike from Fire Emblem. If we're including bisexual, then Juri from SF.
Real trick? Find a trans character who isn't ridiculous. Hell, find a trans character period. The only one who's ever not been handled terribly's from an erotic visual novel.