its not a derogatory term. it has a traditional british meaning that has nothing to do with gay people..
for example, if i said 'faggots should be burnt' or 'im going to burn a faggot' you would go crazy.. however.. a british person (if they know any history) would get a bundle of sticks and burn them..
the term faggot used in this context is nothing offensive at all.. its only Americanisms which have made it offensive, before it was americanized it was not offensive.. if i said 'im going outside to have a fag' in the US i would get weird looks.. over here, it would just mean that im going out for a smoke..
nothing offensive with using traditional british words in an english song wrote 20 years ago.. there havnt been mass protests about that song for the last 20 years, so why make it an issue now? its just censorship gone mad..