The problem with the "don't ask, don't tell" policy is that it forces people to live in secrecy - demands them to suppress who they are in order for a few homophobes to feel more comfortable with themselves. As a woman in the military, I spent my basic training sharing a mod tent with 10 men and 3 other women. I had to change in front of them every day, and have been in some pretty close quarters, both in garrison, and in the field, having to use the washroom in front of men, get changed, and do all sorts of "personal" stuff.
Have you ever been to a swimming pool in Europe (most parts)? You'll find that, very often, the shower facilities are co-ed. Also, the prevalence of nude and topless beaches throughout Europe show that they are not nearly as repressed with regards to nudity as North Americans are. Heck, Janet Jackson showed part of a breast for a fraction of a second on television and it made worldwide news (I still can't figure out why - they're fake anyway). If North American society were as liberal and open with nudity, I would be able to accept the idea of co-ed showers. If North American men were able to divorce the idea of nudity and sex, I think it would be a pretty huge leap for our society in general, and would also do a great deal to kill off a lot of the homophobia going around.
Perpetuating a status quo that attempts to segregate minorities does nothing to help the problem. If people's attitudes are to change (and make no mistake that this is a form of discrimination as real and dangerous as racism and sexism) - shutting them out or forcing their beliefs under wraps is not the way to solve it. You seem to defend perpetuating the problem instead of solving it.