Well Aunt Jo did mention that she was a great patron of the arts due to her late partner. And that she had been too upset to hold the party the previous year. So I could I imagine that the party was a bit larger than usual as it seemed to also be part memorial for her wife. Everyone in their community would want to pay their respects.
I would also think rsvping “No” to the person providing funding to your artistic endeavors very unlikely. So whether all of the people at the party were “out” or not, it would be poor form NOT to attend the the party.
As for inviting Anne & Diana, Aunt Jo seemed to have reached a point in her life where she wanted to be honest about who she was. And she’s in a position of wealth and privilege where even if there was some gossip about her, it wouldn’t really have much of an impact. Like, if it got back to Diana’s parents, I could see them limiting her to supervised visit with the girls. But, from what they’ve shown of the adult Barry’s, they wouldn’t want to be cut out of her will.
I think they were trying to show with Cole how it could easily go another way. He is clearly from a poor farming family, in a tiny community. He’s picked on by the other boys, even by his teacher. If Aunt Jo didn’t intervene his story could have been much sadder than it was.
As for the spirit of the source materials, there are definitely queer interpretations of certain characters in the series. I don’t want to veer too much off the episode discussion, but one of Anne’s future sons reminds me of Cole a great deal. So I don’t think it’s against the spirit of the books, but is more implied than explicit.