Language evolves, you'd do well to evolve with it.
I find the use of ignorant and bigoted rather interesting in the context above considering that one of the synonyms given for gay was queer. The assumption that queer == homosexual is prejudiced itself.
Since we are playing word games, one of the definitions of queer is (from Merriam-Webster) "differing in some odd way from what is usual or normal," Given that gay means queer in your world, I can conveniently attach the definition of queer above and in doing so make the term x is gay acceptable. Ironically, my definition more closely matches what your brother's statements actually meant.
You've equated gay to homosexual in a context that clearly does NOT mean homosexual. You think that anyone using gay to indicate anything other than happy or queer is demonstrating lack of social grace. Sadly, in the long run, you are the one being bigoted. And sadly, you are the one now using gay out of context. Gay has many more definitions than homosexual and happy. Perhapse in the beginning saying "This is gay" was meant as a disparaging statement. I do not contest that, and it's likely my generation who is to blame for that. But this simply is no longer the case and you'll have to accept the definiton that gay has in the context that the new generations use it in.