In this day and age, I think if you characterize it as anything more than someone you're not attracted to hitting on you, it's kind of... old-fashioned. Can I gently suggest: if you think it somehow denigrates your masculinity, or is some kind of insult, well, you're not really getting where it's coming from - that response is all about
you and your stereotypes and has nothing to do with where the impulse came from to make the comment in the first place. Attraction works the same for straights and gays, for the most part. The same people are often hot to both. Hence it's pretty much a compliment and it's good to be nice and polite about it as you decline, or indicate a lack of reciprocation, what-have-you.
I've had gay friends of many stripes, and have been hit on various times by members of the pink team (I'm apparently the "bear" type <guffaw>), and I'm comfortable enough with my own identity to have fun and even tease a little, just for fun, while maintaining a 100% confidence in my sexuality. It takes a while to get there, but you need to start opening your mind, if it makes you really uncomfortable.
For your consideration, respectfully.
EDIT: Plah, so I'm responding to a 6-yr-old thread? LOL, gotta stop doing my reading here at 1 in the morning. Also didn't see p.2. Retiring....
EDIT 2: On Sheepy's angle, I have actually successfully hit on an avowed lesbian (she was surprised she responded), and recently found out the girl I had a crush on in junior high wound up coming out later for the pink team -- that explains her indifference <holds head in hands>.