The first thing that should be mentioned is the subject matter of this episode. It's the "Frasier is sighted in a gay bar", that's the premise. However for a show that prides itself on trying to take the high road (even when the main character fails to) it remains intellectual rather than perverse. The setup is that the brothers (Niles and Frasier) see a new boyfriend of Roz's who they assume is gay ducking into a corner hide out, which turns out to be a gay bar, where one of Frasier's acquaintances is tending bar. However Roz's new boyfriend was never in the club, as Niles finds out while waiting outside. Of course a listener finds out about this, and discusses it on the air, which is the titular "outing". Frasier then runs into a director for the theater, played by an immensely funny Patrick Stewart, and they start enjoying each other's company. Niles believes the director is actually dating Frasier, while Frasier denies or ignores it. However the audience is left to wonder until the final minutes of the episode, when it becomes painfully obvious to everyone, with Frasier of course being the last to find out. Expertly delivered, the cast rises to the challenge of making this a well delivered punchline to a very funny episode.
Overall it's an interesting set of circumstances and the jokes are delivered expertly (as usual) but the subject matter is handled so well that one can't help but enjoy themselves.
This episode takes the title of "best 'outing'" episode" in my book, taking it away from the Seinfeld's "The outing" episode. While both are good, this one avoids absurd puns and catchphrases and instead gives us an interesting and wonderfully hilarious episode to enjoy.
The only true negative on this episode is the inclusion of Gil Chesterton who while funny in his own place, gets a bit too much exposition and officially outs himself through both actions and words. This comes as no shock to fans, but it gives a bit of finality to the character, as this was his one true joke, and while it was fun while it lasted, it etches the character's orientation into stone.