Well, I never did get around to throwing in my two cents on this topic--after being one of the persons to suggest it!
So, being a day--a week?--late and a dollar short, I'll be brief, and here it is, "for what it's worth."
This is where I play devil's advocate to my own understanding of Ennis, or maybe this scene is the exception to prove my understanding to me. I've always understood Ennis to be very much out of touch with his feelings--until the end, when it's too late--and deeply in denial and self-deluding about his sexual orientation. Yet in this scene it's difficult to escape the conclusion that he's perfectly congnizant that he's gay.
When he asks Jack about people on the street looking like "they know," it seems illogical to me for him to think that they might know just, specifically, that he has sex with Jack--even I've never felt Ennis was
that paranoid. No, it just seems simpler and more logical that he means that he thinks "they" look like "they know" that he's gay--which means that he understands that he's gay.
It's funny, though. As time passes, my understanding of the film seems to be growing closer to my understanding of the short story.