Here's Ann Althouse's take:
What crap! Davis is a Democrat, interested in destroying Giuliani and showing his contempt for Republicans by revealing a despicable belief that they hate gay people and that their hatred can be stoked by images of actors behaving according to gay stereotypes. Decent Democrats should condemn Davis's video campaign, "Gays for Giuliani." It's blatantly homophobic. And I condemn Fox News as well, for reporting the story the way it did, illustrating it with a stock photograph of Giuliani in drag that lacks any sufficient connection to belong in a professional journalistic report on the video campaign.
Republicans should resist being baited by this sort of trash and should take note that Democrats are afraid of their front-runner -- afraid enough to deal in stereotypes that offend their values. Or are you going to tell me that Davis is an independent operative, doing his own thing? Then condemn him!
Of course this ad is homophobic. Who the gay Democrat director is trying to stereotype is Republicans. You know, those one-dimensional, close-minded haters.
Because the ad is made by a gay Democrat, of course, it isn't homophobic. It's politically correct gay stereotyping serving the greater good. It's OK to sell your soul if you win back power.