Homosexuality is a natural observable phenomenon in the human species across time and cultures. It is an aspect of people as fundamental as height or skin tone. Not accepting them for any reason is intolerance and does not have to be tolerated. It is also intolerance to not accept Muslims, but you do not have to tolerate any intolerance that manifests from their beliefs.
People are not tolerant or intolerant, specific views held by and actions done by people are.
You don’t need values to reason about tolerance.
The only form of intolerance Popper recognized was bigotry around beliefs. The concepts (and words) homophobia, racism, transphobia, and islamophobia were not even invented when he wrote about the paradox of intolerance.
When he described the intolerant, he specifically meant people who would use violence to stop others from expressing different beliefs - nothing else. He did NOT mean "intolerance" of any particular skin tone, or sexual behavior, identity group, etc.
This is important because intolerance of sexual behavior doesn't structurally break the system of discussion and truth-finding that we use. You could jail every blue-eyed person, just was we jail people who commit certain crimes, but as long as everyone can speak then our system for collective truth-seeking still works. The ONLY meaning for the word "intolerance" that breaks that is intolerance of free speech, and that's the only kind of intolerance that Popper said needs to be suppressed with force. And he was right.
I see this misunderstanding constantly online - honestly it's hideous to see people twisting Popper's pro-free-speech message into an excuse to crush those they misunderstand or disagree with. Literally inverting his meaning.
Yeah, it really is sad to see people so eager to embrace authoritarian sensibilities like this. The paradox of tolerence has seemingly become a buzzword without meaning, perverted beyond its original intent; a simple facade that enables people to feel self-justified about their own intolerance while still allowing them to claim progressive ideals.
- George Orwell, "Freedom of the Press" (1945)
Note that this predates Popper's paradox.