I think it’s all a matter of context.
Let me see if the guidelines has a quote. (While they are for the official games the hosted games aren’t a complete free for all.)
Avoid casual sexism, like “he’s crying like a girl”. (Characters in the game can be sexist, but make sure to be clear that it is the character, not the authorial voice, that is expressing these ideas.)
Our games do not endorse or perpetuate rape culture, homophobia, or transphobia.
If your game includes one of these topics, it should be treated seriously and with respect for the victims. The PC should not be the one perpetuating these ideologies.
My own call on this would be that the exploration of internalised homophobia from a gay character would be acceptable. That having a straight cis protagonist throw around homophobic slurs wouldn’t be.