TBH to me, people being offended at the use of "gay" (or whatever else) as an insult is just another version of trying to be politically correct. There's a HUGE difference between insulting a person for being gay("Shut up you GAY"), and using a word which, though origionally links to homosexuality, now means something completly different, and being offended (" awh that's gay").
And it DOES mean something different, because it's now a non specific insult. If a kid says "ahh that's so gay!" they mean "that's so stupid" or "that's so uncool" not "that's homosexual".
As far as offending gay people goes - I think actions speak louder than words, and it's not the kids in the classrooms saying "awh that's so gay" that's the issue - as far as equality rights goes.
Words change their meaning. I think people should embrace it, enjoy it and have some fun with it! It's not a BAD thing, it's progression, it's evolution, and it's really interesting.
At our school, I'd say insults fall into two catagorys, one with meaning being important, one where it isn't. For example "Gay" doesn't refer to being gay, but "slut" does refer to promescuity. "Goon" another popular choice, hell I don't even know what it means. In our school "Jew" does refer to racism, normally, it doesn't TEND to be used in a non-specific way. Retard tends to be nonspecifc... you get the idea.