You make a good point, classifying homosexuality as an illness could increase tolerance and discourage people from seeing homosexuality as sexual depravity. The problem with that reasoning is that history does not support this premise. During most of the 20th century, homosexuality was considered a mental disorder but it sure did not create an environment of tolerance. Homosexuals were considered sexual deviates and a danger to the community. They were jailed, locked away in asylums, and worst of all forced to be something they are not.They were simply following their American colleagues (who in many ways set the bar for everyone else) and throughout the West, there were mass gay protests and violent actions against psychiatry.
Actually the very opposite is true with respect to classifying homosexuality as a paraphilia or sexual disorder. People would actually have more reasons to be tolerant and compassionate because their condition would be seen as something beyond their control. If you declassify it, stripping it of its mental illness status, then it's definitely more likely to be seen as sexual depravity and perversion. The common symptoms are depression, and a much higher prevalence of suicide, among a number of other conditions, which you conveniently dismiss as being caused by bigotry, and homophobia. Shifting the cause to external factors and completely ignoring the fact that homosexuals show the same negative symptoms everywhere, not just in societies where they're mistreated. Their problems are prevalent everywhere, whether they live in Norway or in Alabama.
The DSM is a handbook for therapist to assist in diagnosing a mental disorder and forming a treatment plan for that disorder, not to change how society views that mental condition. One of the problems which was cited when the DSM include homosexuality as a disorder was it sent researchers down blind allies looking for treatments for a disease that did not exist. This resulted in therapists recommending treatments that had no chance of success and often the symptoms that brought them to the therapist where not treated.