In my experience, the word 'fag' can be used in gay circles without a second thought of having given offense; so if you're gay it seems like calling another gay man a fag is not offensive. If you're straight calling a gay man a fag then it's generally taken on the offense.
Very much like black people calling each other 'niggers'. It's okay brother to brother but for a white guy to call a black guy the same will cause some problems and is "racist."
Also like Nate says a lot of it is connected with 'tone of voice' used. It can be said in a way that's 'dirty and exciting' or 'sarcastic and hurtful'. Depends on the one saying it.
Just my .02
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That was lame.
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