Faggot would more often apply to a weak, wimpy man. Similar to to pansy. That probably comes from the British private school set up, where young students would act as "fags" to older students, doing everything for them from polishing shoes to running errands in the rain. Don't forget that Australia and NZ were settled in the late 18th and early 19th centuries. The English we speak is very much of those times. And the vast majority of our cultural education has been British. The American influence is from much, much later.

Also, faggot is used so frequently as an insult that the meanings got lost along the way. Like the word "cunt" (yeah, even typing that was difficult ).

So I think you are being over the top with the whole soul searching thing. She made a mistake, she's apologised, move on.