when those users find out a instance largely made up of queer folk defederated with their instance don’t you think they’d be more likely to make an account on another instance and bring the hate here?

I can't think why that would be the case. Bigots gonna bigot. I think they're likely to harass queer people because we exist, and anything that makes that harder (e.g. defederating instances that protect them) is good actually.

"Don't feed the trolls" never really worked, it just meant they continued to exist without opposition.

unless the admin is supportive of that behavior it would make more sense to give them a chance to deal with that on their own

I disagree. Harmful, bigoted content is already being posted there. Defederating now protects this community from being exposed to it.

If the admin is responsive and deals with the issue, we can always federate with them at that point.

So far as I could tell it was not an insult.

It was an accurate adjective.