There has been some buzz of late that the Obama administration may repeal the "Don't Ask, Don't Tell" policy that prohibits openly-gay service in the US military. I have just a few thoughts on the topic.
First, DADT was itself a loosening of previous restrictions. Bill Clinton had wanted to get rid of the previous policy, which not only didn't allow gays to serve, but also asked up front about their orientation. Those who tried to serve while remaining closeted could then be drummed out of the service if they were "outed." And his hamfisted attempt at a gay-friendly effort, when combined with his overreach on Hillarycare, an "assault-weapons" ban, a never-materializing middle class tax cut, and other missteps served to undermine his image as a not-so-liberal bubba and resulted in the 1994 takeover of congress by the GOP (followed, of course, by his succesful "triangulation" and recovery on a more centrist model in his 2nd term).
Secondly, the key issue--then and now--is what is best for the military. When you enlist, you check certain "rights" at the door of boot camp. I don't give two hoots in heck about social engineering in the military. I want the army, navy, air force, and marines to be the best in the world at killing people and breaking things while serving the foreign policy goals of the USA. Period. Full stop. Whether it's gays serving openly, women in combat, or whatever, the big question simply cannot be what we think is nice. Bombs and tanks and guns are, by definition, NOT NICE. Get over it.
That said, in the past 20 years or so, American society as a whole, and the military as a part of it, have seen changes in the acceptance of gays (we'll leave aside any discussion about whether that is a sign of progress or decline), as well as an expanded role of women in combat. I read a statistic (don't remember where, so no link) that said only 51% of servicemen now say they are against gays serving, compared to more like two-thirds back when DADT was new. And it is also true that other countries have gone farther down this path, without catastrophic results.
My own take (which admittedly, comes from the biases of a 40-something hetero dude) is that the biggest issues involve fraternization and unit cohesion. People do stupid things when they are in a romantic relationship. If my wife and I served in combat together, my #1 goal, even superseding that of our mission, would be to protect her first. Whether it's straight men and women serving together or gay men and/or lesbians, the possibility of personal relationships undermining group cohesion is there. (I've heard some attack this line of thinking by saying, "are you suggesting that gays have less self-control than straights?" Answer: that's a strawman argument, as I don't want women on submarines, either, and also, yes, I'm perfectly willing to say that gay men, on average, show less self-control than hetero couples--not because they are gay, but because they are MEN, without a woman to slow them down.) I'm not super-worried about discrimination and prejudice. The military handled that with race in 1948, and can again.
What I would do, were it up to me, is find out first of all what the military thinks. If making the change will hurt enlistment numbers, how much? Is there a trade-off in terms of efficiency? What is the cost vs. the benefit? Let's be Hippocratic: first, do no harm. Assuming they say it's a go, then I would let gays serve in the exact same way that women do now. Fly a plane? No problem. Serve as an Arabic translator for military intelligence? Fine. Submarines, SEALS, or infantry? Nope. Not because you're not tough or macho enough. (Shucks, I had a female assistant coach once who was an ACC record holder in the discus... she would have made a MUCH better soldier than I would.) But because it's not worth the potential drawbacks.
Sometimes change is progress. Sometimes it is not. A battlefield is no place to be tinkering with progressive social goals.