* First, Mercury was not gay. He was bi.
May let this slip in an NPR interview when he got his PhD. The NPR hack was all about celebrating Mercury being a gay icon, and May stated that Mercury liked girls as well because May was Mercury’s roommate when he was banging away at groupies (such as the “Fat Bottomed girls” he croons about).
Basically, in the anything-goes 1970s, the hedonism was so much that Mercury ended up doing what a lot of debauched folks do who don’t have limits: he pushed them. While it was first so cool to have a different hot blond girl sleep with you every night because you sang well, then it got boring, so you got two girls, then you tried a black girl, then a fat girl, then a girl with one arm, etc. until you ended up trying sodomy and liking it, and some went further, into bestiality, pedophilia, etc.
This is exactly the pattern noticed that the Catholic Church noticed and warned about for centuries, as seen with Roman Emperors and French Aristocrats: immense power, immense wealth, and no social consequences caused people to become sexually degenerate. Mercury was simply a prisoner of his success.
Related: in the 1970s and early 1980s a lot of rock stars tried to give off gay impressions—the better to drum up attention from the disco crowd. David Bowie, IIRC, kicked off this idea, and he and Mick Jagger had a mutual arrangement where they would have interviews and publicity stories and photos of them together where the innuendo and imagery suggested more. The only counters to this were the bands that sang florid, longer bitterwsweet ballads (e.g. The Eagles, Dan Folgelberg, Elton John) , which also made them seem less masculine. If you wanted men in music who seemed straight and masculine, you had to go Zepplin or Floyd, but their complex music made them seem distant artists to many—you had to sit through an hour-and-a-half song about Frodo or the Dark Side of the Moon and try to figure out what it meant, instead of something simple about meeting girls and trying to get with them.
My impression was that the The Ramones ended this problem. Totally straight, hard edged, militaristic, and committed to two-minutes-of-hard-noise and get-to-the-bedroom, the Ramones set the stage for 80′s hair bands to start burning their disco albums and acting like they just wanted poontang. Jagger and Bowie dropped their semi-homo act around this time.