I think you and I agree on more than we may think. At the end of the day, I want everyone in the community to feel not only included, but unified as well.
I understand the word still hurts others, but so do so many other words commonly used within queer spaces. Gay is still used as a slur and pejorative and yet is still used universally amongst the gay community. I think part of the reclamation process is not only using the word whenever you can, but taking pride in the word as you do it. I do mean it when I say I feel warmth and love in the word queer, and I try to extend that to anyone I use it to describe. If someone within the community expressed discomfort in the word though, I wouldn't use it for them.
And I think at the end of the day you and I can agree we need an all encompassing term. Something that is inclusive, easy to say, versatile, and if possible, steeped in tradition within the queer community, I personally feel queer is the best candidate for that term, but I would be welcoming to better suggestions.