The link in the original post is to a blog article on the story; I don't know enough about "boing boing" to know if it's worth even posting a comment there, or how much trouble they go to to get their facts straight.
Here's a link to the
newspaper story, which includes some corrections.
It appears from the story that what the school was objecting to was what she was wearing in the photo. As usual, all participants are mixing up
gender (or, more correctly,
gender conformity) with
sexual preference. There are utterly heterosexual women who have hated dresses and skirts all their lives, whereas there are plenty of lesbian women who love dresses, skirts, and other feminine stuff (the usual term for them is "femme.") There is no mention in the news story that she was particularly harrassed for being lesbian, so either the school officials preferred to be unaware of it (don't ask, don't tell) or didn't care.
My own attitude toward this sort of thing is that she may learn to see being rejected this way as actually a good thing, however painful it may be now. High School is a lot like prison: in the long run, you are better off if you
don't adapt well to the environment, because adapting to it means learning ways of living and thinking that put you at a disadvantage on the outside. She appears to have been fairly successful, by high school standards, so maybe this experience will be a wake-up call as to how much use being "successful" in high school really is.
BTW, there was a similar sort of issue, in Mississippi, of a
lesbian girl who wanted to bring her girlfriend to Teh Prom; the connection is that she wanted to wear a tuxedo. In that case, it appears that the school (and the town) were offended both by her choice of dress and her desire to bring someone of the same sex.