I can see why that idea is tempting, but it doesn't seem to work.
Military had "don't ask don't tell" for a long time because legalisation and social acceptance are different (also seen in reverse order with cannabis). Even today, the percentage of people in the US who think society should not accept it, 21%, is higher than the percentage who are homosexual or bisexual: https://www.pewresearch.org/global/2020/06/25/global-divide-...
For this reason, there's still plenty who want to stay closeted.
And there's a lot of stuff with 5% or more reporting interest, according to Aella's sexual taboo survey, that society still very much isn't OK with: https://aella.substack.com/p/fetish-tabooness-vs-popularity
If sexual liberation was driven from the top to reduce blackmail opportunity, I think there'd be a lot more desires whose taboo was lessened, not just homosexuality.
(Though perhaps I'm underestimating how much else has changed due to what hasn't; I'm sure "cheating on spouse" used to be a thing that killed political careers, clearly doesn't now).
It also feels like the social acceptability of trans people has moved backwards. (Just my perception, or has that actually shifted?)
That said, the logic you give is still sound, and I think the increasing ease of private surveilance means we must eliminate as many taboos as we can so that society can keep functioning.