In response to RogerTaylor's comment:
As far as Freddie being closeted - I would argue that he was very open regarding his bi-sexuality and for that Queen "lost" their American audience as a result - keeping in mind that all happened around '80 to '82 their last US tour.
Thanks for keeping me honest. To clarify:
I was talking more about Freddie's HIV status in relation to the culture as a whole and the fact that a lot of what we know consider commonplace was not nearly as shareable. All that I've read describe Mercury as a sensitive, private person, as many artists - LGBT or not - sometimes are.
I believe that people who loved the music...loved the music regardless of his sexuality. As the 80s indeed saw a drop in quality for the band, I think that alienated more fans than anything else.
Re: Billy Squier - the backlash from the culture-at-large was not only ancillary to the music, but it was ironically the opposite of the persona he had fomented: the overtly sexy, writhing, jagger-esque rocker. (see also: M. Hutchence)