It seems worth clearing something up at this point. The lyrics are not about repressed homosexuality. It is well known that Joe Meek was gay, and self evident that Howard and Blaikley were also, but that dos not mean that every song they wrote/produced had to be some secret message. H&B were inspired by watching a young couple gazing lovingly at each other and the lyrics, as can often happen, almost wrote themselves. The listener is free to interpret them in any way they chose but there was no specific gender or sexual orientation assigned to the characters in the song.
Crackin' tune. I have a hard time believing it was actually banned though, and I can't find any evidence for that. Tons of great songs didn't get played on the radio in the 60s, especially so in the UK with the BBC's stranglehold on the airwaves.
I did see this on a fan page, which kind of fills in the backstory of the rumor: