Well, even if he's written into the story as being heterosexual / bisexual, I think some of the criticism / controversy was that he was portrayed as being a stereotype "coded" as gay - the colored clothing and fashion, haircut, pose in his artwork (holding another man's head in submission). Yeah, sure, if you go into the script it might say he's in love with a woman, but I believe the concern was the artwork was conveying a shorthand to viewers - "look at this guy and how he doesn't look like a traditional villain, taking on effeminate or stereotypically gay qualities - that's how you know he's bad! Because effeminacy / non-traditional masculinity is bad."
There's a long history of this outside of video games - if you haven't watched it, I recommend the documentary "The Celluloid Closet" about how Hollywood "coded" and sent messages about homosexuality without ever mentioning the word so they could avoid censorship codes. One of the prime examples is Peter Lorre's character in The Maltese Falcon - portrayed as slightly effeminate and obsessed with fondling his walking stick (seriously) - the word "gay" isn't mentioned, but the viewers are meant to understand (consciously or unconsciously) that he's not to be trusted because he's "other".
And on the argument of "well, if you want equality there should be gay villains too!", I think that's a fair argument to make if you can point to all the gay heroes and protagonists as well. This isn't just limited to LGBT people, but also other racial and religious groups - Asians, Muslims, etc. When a minority group is relegated to portraying one type of character, whether positive or negative - the comic relief, the Asian geeky sidekick, the Muslim terrorist, the "black guy who dies first in the movie" - and don't have equal opportunities to portray other types of characters like the romantic lead or the hero, then there's a real concern with unequal and stereotyped representations.
Honestly I don't have a lot of interest in Far Cry 4, I just think arguments saying "equality means being comfortable being portrayed as the bad guy!" are silly when it's difficult if not impossible to point to examples of minorities being portrayed as the good guy.