That is terrible - why is it gay for boys to play with girls toys? And to laugh at him and make insinuations like that, it's just wrong. When my DS was about 3 he loved dressing up in this pair of red high heels that was in the dress up box at grandma's house, I thought it was adorable lol. DH was a bit less enthusiastic, but he knew that it was just innocent play - why make a big deal out of it? It will only turn it into an issue for the child, when as far as they are concerned they are just playing.