In what way did Dmitri intend to insult M Gustave at the funeral?

At Madame D.'s funeral in The Grand Budapest Hotel, when Dmitri called M. Gustave a "fucking" faggot, does he mean that he's a gay person or a loser? Because in Urban Dictionary we can see that in the old time a faggot can mean a loser too. I understand the joke after that, but I'm just confused with Dmitri's original meaning of calling M. Gustave a faggot, could it be on account of the fact that M. Gustave called a man "darling" before he's being recognized in the funeral?

Best Answer

It's both an insult and a gay slur in this scene. To quote from the screenplay:

OLD MAN Who’s Gustave H?
M. GUSTAVE (inevitably) I’m afraid that’s me, darling.

Every face in the entire assembly now turns around fully and stares at M. Gustave and Zero. Silence. The room erupts. All the distant relations start talking at once. Dmitri is on his feet, advancing toward the back of the room, flanked by Jopling, as he explodes, pointing at M. Gustave:

DMITRI That fucking faggot! He’s a concierge. What are you doing here?
M. GUSTAVE (stiffening) I’ve come to pay my respects to a great woman whom I loved.
DMITRI (turning to the room) This man is an intruder in my home!
M. GUSTAVE (making a point of it) It’s not yours yet, Dmitri. Only when probate is granted, and the Deed of Entitlement

-- DMITRI You’re not getting “Boy with Apple”, you goddamn little fruit! M. GUSTAVE (genuinely offended) How’s that supposed to make me feel?

Then, a few lines later in the screenplay:

DMITRI If I learn you ever once laid a finger on my mother’s body, living or dead, I swear to God, I’ll cut your throat! (screaming) You hear me?
M. GUSTAVE (clever though dizzy) I thought I was supposed to be a fucking faggot.
DMITRI (hesitates) You are, but you’re bisexual!
M. GUSTAVE (pause) Let’s change the subject. I’m leaving.

So you can see from these two scenes that Dmitri is apoplectic with rage. Given M. Gustave's mannerisms (and as you point out his habit of calling people 'Darling'), he immediately leaps in with a gay slur.

However, later he gets confused over this, accusing him of touching his mother - after which he changes his slur to a bisexual.

I'd say he's simply throwing out the first insult that can come to his mind given his rage. Much like insulting a black person with racial slurs, when Dmitri realises what has happened with the painting, he zones in on the first thing he knows about M. Gustave - his flamboyance - and he attacks him on that ground.

The use of fucking as an adjective before the insult both shows his anger and suggests that it's intended as a furious insult just as well as a slur.