I thought McKellen was hysterical with his acting stuff ... lovely performance from Gervais in that scene as well.
I also thought the episode was homophobic. Millman is homophobic ... and a bit of a prat because of it. Quite funny. But in the end I just couldn't find any way to read it on more than one level: as a viewer, I was consistently asked to laugh at homophobia. And more homophobia. And more homophobia. It wasn't very sophisticated, it got very repetitive and wearying, and try as I might in the end I couldn't find anything cleverly, subversively anti-PC about it: to me it felt like a long, boring half-hour of cheap anti-gay jibes. The homophobia felt embedded in the writing.