I think that what matters most is the way Mr. Rambo felt through his tenure in the show, and undoubtedly he was feeling very uncomfortable by Larry´s reaction to his "open bisexuality". Larry was friends all his life with people like Joel Grey who, despite he only came out of the closet a few years ago, was almost as gay as Liberace. Besides, I think what probably might have bothered Larry is seeing Dack smooching other men at the Southfork set (only thinking about it I get... you know). Of course, it´s only my guess, but I wouldn´t call Larry a conservative person at all.
Something that´s not mentioned here is that Larry guest-starred in a failed Dack show prior to "Dallas" called "Sword of Justice". I tend to think that some things will never be known to us fans. Who knows if something "happened" at the filming of that episode, and Larry held a grudge against Dack (or in reverse). Again, it´s all guessing and the most important thing is how great both actors played their characters on "Dallas".
View attachment 37928
"Well well, Dackie, I thought you brought me to the wet T-shirts night for girls
and not to the Bette Midler impersonators night in your fav gay club!"