The thing is, he doesn't deny that his ancestors engaged in it. Nor does Saxo Grammaticus who mentions an old cult devoted to Freyr with priests that may have been homosexual. We know that homosexuality was not frowned upon in Norse society if you were the "active" partner, but to be the "passive" one would have brought you shame. Snorri and Saxo both talk about that but never mention anything about the gods themselves participating in homosexual relationships. I must also disagree with your assertion that the absence of homosexuality made the Norse a more presentable people. By this time they had largely been accepted and assimilated into a Christian society which held the Greek and Roman stories in high regard, negating a need for further acceptance via pagan traditions. Snorri himself in the forword to the Edda (Elder I believe) displays his admiration for Greek and Roman "heathens" far more than his own heathen ancestors, who he condemns. He tries to rationalize the Aesir as Trojans in an attempt to be part of the classical tradition. If he was projecting his admiration for the classics into the forword, wouldn't he have been inclined to leave details of homosexuality in the norse mythos if they were more frequent? All over Europe, Greece and Rome, and their pagan stories, were admired, regardless of the homosexual relationships included. Dante Alighieri's "Inferno" shows deep admiration for these stories, particularly the poets (Vergil and the Aenead). He even places some of the classical pagans and heroes in a more desirable part of Hell. I can agree that Norse mythology was largely Christianized, as was Beowulf and some of the sagas. However, I don't see much of the tradition being changed. If evidence is uncovered to suggest otherwise, I'll buy it. But historians and theologians/mythologians (I have no idea, man) typically have a consensus on Norse views of homosexuality and, thus, the part it played in their religion. Keep in mind, these were a hardened people. They lived in the frost and needed many children to help out. Homosexuality would not have provided them with sons, though it was still practiced and accepted for the "active" role. With that in mind, their gods probably would have reflected or shaped many of the views and qualities of the people. Roman and Greek mythology fits ancient Roman and Greek life. Abrahamic mythology fits the lives of its followers. The logical assumption here is, based on Norse behavior, their religion fit their lives. The large problem with this kind of thing is that it is largely conjecture due to the destruction of important places and artifacts which would have provided more insight into Norse society. But, if Snorri and Saxo were going to glorify their past, they would have glorified the deeds of their ancestors and downplayed their pagan gods. You must also take into consideration accounts written by opponents and critics of the Norsemen who were heavily biased and would have exaggerated the actions of the norsemen to convince and educate their colleagues of their sinful nature, like Adam of Bremen and the Arabs. Even these accounts which downplayed the Scandinavians make little or no mention of homosexual "sin." It meshes well with the accounts of Snorri and Saxo.
You and I need to talk about this kind of stuff more, SS4G. I rarely get a chance to talk about Norse culture on this level of detail.