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Wiki - The paradox of tolerance states that if a society is tolerant without limit, its ability to be tolerant is eventually ceased or destroyed by the intolerant. Karl Popper described it as the seemingly self-contradictory idea that in order to maintain a tolerant society, the society must retain the right to be intolerant of intolerance.
The social contract is to tolerate that which doesn't harm or significantly affect you. Someone can choose not to be gay, and that's fine. They don't have to "tolerate" a gay guy hitting on them. However, 2 gay guys sleeping together is none of their business. In your case, the religious person can feel what they want. When they start trying to impose that on the gay guy, they are being intolerant.
Things get more complex when worldviews start impinging on each other. E.g. the religious person can have issues with a "gay pride" parade. At the same time the gay community has a reasonable right to express themselves. The balance of these views is a lot of how the rest of society functions.
People don’t choose their sexuality. They can choose not to act on it, but that’s repression and is harmful.
We’ve got to the crux though. There are opposing viewpoints. A gay pride parade might be tolerated, but what if it is protested, peacefully. I should the pride parade tolerate the protest?
That's where the debates and larger social attitudes. A gay pride parade, by its nature impinges on those in the area. How much we accept that is part of a larger social discussion. It is unreasonable to completely ban big public events, but also unreasonable to allow any and all, without a proper understanding of their effects.
In your case, a protest would generally be outside this. If the protesters travel in, to put themself in the environment, then they are being intolerant. Conversely, it's not if the parade goes straight past their church, and they put up signs etc. In the first, they are deliberately putting themselves into the situation. In the latter, they are being affected by it, through no action of their own.
The orange parades in Northern Ireland are a good example of this problem. They want to march along "traditional" routes. Those routes take them through areas who disagree with them. Both groups have very reasonable arguments. Who's rights should win out?
So, if it's just about being in the area deciding, is it intolerant for the gay people that live in an area to protest the church daily that preaches they are living in sin?
You seem to be tying yourself in knots trying to justify what is tolerance and what is valid expression. It shouldn't depend on where the bigot happens to be located. Tolerance is not protesting or denigrating anyone else's right to exist. Preaching that gay is sinful is not tolerance. Marching past people who disagree with you just to inflame tensions, a la northern Ireland, is not valid free speech.
If Jews in Nazi Germany had to just accept that nazis don't like Jews, and wellz we're in Germany, whatcha gonna do? Would that be in line with your thinking? Or should we say that antisemitism is wrong, even when it's within a regime that believes in it? That's the paradox of tolerance. You don't tolerate intolerance just because it's someone's belief.
Self defense isn't oppression.
I agree with your statement, but out of context, it seems meaningless.