Just watched it on BBC4- it finished with Village People-YMCA. I wonder why it never occurred to me in 1979 as a student, when I thought I was so worldlywise, that they were so camp? To quote wikipedia "created by Jacques Morali and Henri Belolo to target disco's gay audience by featuring popular gay fantasy personas,".
I'm sure you are right, jeffa -but they do say they were targeting the gay 'community' (I dislike that phrase but can't immediately think of an alternative) and it's now clear they were deliberately aiming to dress as gay stereotypes.
I just watched it too, but what struck me was when Peter Powell had his arm around a girl's waist and then gave her a kiss. In the light of the DLT case, it wouldn't surprise me if she also brought a case against him (PP) for 'groping'!
I thought they were really just a stereotypical group of people you might find in an American 'village'. I had no idea about the gay thing when I was young and naive.
It never crossed my mind at the time either that they were meant to be gay icons, always thought it was just a group dressing up in the style of the era - but I was a tad innocent.