redadmiral that's rather shocking. I would have thought that even primary schools have a duty to confront victimization on all grounds - race religion gender sexuality etc.
Even though this isn't, presumably, a case of a specific child being bullied, they shouldn't be allowing 'gay' as an insult, because of the impact (later on, perhaps) on gay teens. In any case, so many say that they already knew, at primary age, that they were gay.
If you can be arsed (I could be, I think) I would write a letter outlining what was said at the meeting, and asking him to confirm in writing that this is in fact school policy, with the implication that you will be taking it to the LEA for clarification if so, since you thought that homophobia was taken seriously these days even at primary level blah blah blah.
Sorry, rather fractured response, in a bit of a rush, but this is very wrong I think.