Yes, I think MH's explanation is exactly what the writer meant. The rainbow is a symbol of gay pride or a way to express that you are "gay-friendly."
I believe the idea of "rainbow dust" is exactly what MH suggstions - they don't go around trying to "convert" people.
The statitistics I've heard most often is 3% of the entire population, not the U.S. population, but it's more "okay" to be gay here than in other places, so they are more open about it and do not feel it must be hidden as much as it might have to be in other cultures.