If you hear this phrase, it is most likely to be used by people of the right-wing, conservative political grouping. Generally, they are homophobic and/or Christian. Christian's bible (a fictional tale to keep your life occupied) tell them that gays are looked down upon by Jesus, although he supposedly was also a saint and loved everyone.
To use this phrase is to dislike someone of a lesbian, gay or bisexual sexuality. See homophobic.
Liz: Hey, it's Sarah Palin! I support Obama! *is wearing gay pride shirt*
Sarah Palin: Damn homo! Hey, Joe, let's go shoot wolves from my ol' heli!