Man, you have NO idea how effective that is - a gay guy calling a straight guy a faggot. There is practically no worse insult to a straight guy. Especially in those situations where the other guy is trying to goad you into a fight. It turns the tables completely and totally disarms the other guy. It's a lose-lose situation on his part. Either the slur will prompt the guy to strike first (giving me the self-defence defence, plus possible Hate-Crime enhancement - he hit me because i'm gay) or the guy will back down and slink away (as most do). Either way I win.
I've done it. It works.