I'm just reading all the LGBT posts for the first time as my 10 yr old has just 'come out' as far as a ten year old can. Interested in what you're saying because it was DS1 who dressed up in fairy outfits, demanded pink toenails and chose some fairy doll magazine for his first weekly comic, much to DS2's disgust, who was far more blokey in most ways. But it's DS 2 who is having gay crushes and DS one who goes scarlet at girls.
So, not sure if childhood behaviour is an indicator or not.
I think men are put under a LOT of pressure to be "Real Men" from the time they are very young boys. Your DH will have been brought up to be a "Real Man", and for him (I'm guessing he went through his teens somewhere between the late 60s to the late 80s) being gay means not being a "Real Man". He's probably very scared deep down that your ds will be ostracised for not being 'masculine' enough (still happens all the time I'm afraid. Some of my less 'macho' male friends have experienced quite a lot of street harassment and general bullying from other men).
Maybe try talking to him about the idea that your sexual orientation and your gender identity are not the same thing? That even if your ds was gay, it wouldn't make him any less of a 'man'?
Of course, there is a WHOLE other conversation to be had about people who feel non-conformist ways about their gender and how they feel about their masculinity/femininity. But maybe step by step is a good start. .
My husband and I were having a conversation the other day about what we do if our son was gay. My brother is gay and my son is very similar to my brother as a child. He doesnt play with cars or trains and has a toy pink dog and an imaginary friend who is a butterfly called Annabell (after baby Annabel. He is only 4.5 and wouldn't worry me one way or another if he was gay or not. My DH on the other hand would be fuming and he said if he was gay then he would be extremely dissappointed and his reaction would not be a good one. He worries as he doesn't play the traditional male games but DH doesnt help by not wanting to spend any time with him as he is always busy with his own hobbies. Just wondered is this a normal reaction for a father to have it seems to me the mothers are just happy if their child is happy but the dads find it more of an issue.
My parents were initially devestated when my bro came out but have slowly come round to it, and my dad and my bro have a far better relationship now than when he was a kid as my dad was constantly telling him to man up and now he accepts him for who he is!!