This in some ways comes down to the question of whether camp is always/only gay.  John Waters is an openly gay director, who problematizes the corniness of his movies partially through stunt casting -- the porn actress Traci Lord, Patti Hearst, and Divine -- who was a regular member of Waters' troupe, not just appearing in Hairspray.

Does Divine as a performer fall more into the tradition of drag queens or as a performer of the British tradition of the "dame role"?  In British children's theatre, roles like the wicked stepmother and ugly stepsisters were played by large, generally unattractive men for comic effect.  Since the role of Edna was written as a "dame" role, it is appropriate that it be played by a large man -- but I am not sure the offstage sexuality of the performer is important.  Many landmark gay films have featured straight male actors playing gay characters, while deliberately discussing their wives and children in interviews.

I'd argue that Harvey Fierstein was asked to play Edna less because he was gay than because of his association with cross-dressed performance AND his position in legitimate theater.  He moved from working as a drag queen, to writing and performing the award-winning Torch Song Trilogy and then writing the book for La Cage.  He followed up his performance as Edna by playing the patriarch Tevye in Fiddler on the Roof.  Harvey Fierstein was replaced in Hairspray by Michael McKean.

John Travolta had perfomed in a dress previously on SNL on Coffee Talk -- a show hosted by Mike Meyers, dressed as a NY matron.  This character by Travolta was more arguably gay than Edna -- he was playing a character who was born a man who had changed his name to Barbara Streisand.  He was very funny yet subtle.  As a Catholic, I think that it is unfair to assume that a person has particular views about sexuality just because their religion does -- or to expect them to publicly denounce aspects of their religion, particularly if they feel that their faith is already under attack.

 John Waters is probably making more money now than he ever did during his film career.  As a fan of Hairspray, I think the mainstreaming and commercializing of Waters' camp vision is an interesting question -- of which Travolta's casting is only a small blip.  I'd make a stronger argument that Michelle Pfeiffer is even more out-of-place filling in for Traci Lord.  Courtney Love should be playing that role.