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I didn't get it until years later as well.
Watching it now, I kinda wished they actually had the courage to make the character gay. It was 1985, and they were trying to make money off the original, so it would've never happened, but Jesse being gay fits way better story wise.
He has way more chemistry with Grady than he does Lisa, and it's very clear. Plus, him being in the closet and struggling with his sexuality seems like the perfect situation for Freddy to exploit.