In the original game, you go to the HoneyBee Inn to get makup put on. While there, you have to pick one of two rooms, and can spy on people in the other rooms.
The "@#%@ room" causes cloud to have a hallucination of himself, which attacks him and knocks him out-- it is ... STRONGLY... implied that a large burly gay man bangs him while he's unconscious, and gives him some raunchy underwear.
If you take the "Group room", Cloud is treated to entirely too many big burly men for a bathtub that small, who all proceed to "wash" him. Cloud does not at all enjoy the experience, and asks to get out of the tub early. He gets "sexy lingerie" key item.
In the other two rooms that you can spy on, In one there is an elderly couple who are having a hard time relaxing in "such a fine room", and what appears to be an erotic cos-play with President Shinra dressed as as a king, trying to sound (melo)dramatic with some absurd rendition of some epic fantasy plot, with one of the honeybees as the female star who has been 'cursed' to be unconscious. Or something... Regardless, it is clear the President is into some really unusual tastes.
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In the remake?
Cloud goes and gets a rather sensual "hand massage" after dropping a buttload of gil, then has to fight a pitfight to win the prize money to get Aeris a dress. While doing the fight, he attracts the attention of one of the Don's lackeys who are charged with the "selection process" (ahem). This individual happens to be a gay diva, for lack of a better description. If you pull off the "Press the button to the rythm" mini-game, he agrees to give you a celebrity makeover on stage, and puts you in some... Rather odd ... clothes that look a bit like a slutty french maid outfit.
This is in very stark contrast. In the original game, you have to do a squats competition to get the blonde wig, and get the dress for free from the dressmaker for giving him a new inspiration.