DH- I think that's right... there is just not as much of a need for a gay ghetto as there once was. Like Little Italy, or any other ghetto, it's really more of a symbolic heart to a geographically wide-spread, diverse community. The village is getting more mixed, and the whole city is more gay friendly, which is all great, imo.
The sale of 31-37 Dundonald is yet another example of the enormous pressure on this area to incorporate major new density. I think it would be cool to see Dundonald evolve into more of a charming, green, human scale destination, in contrast to the presently grim, rag-tag pedestrian realms of commercial streets like Yonge and Church. There already are businesses on Dundonald- i don't think it's that much of a stretch to imagine it becoming a commercial street with a similar scale to Yorkville, Mirvish Village or Kensington. Better that than taking it down for more Casa's and X's (of course there will be more of these, inevitably).