Here we go again, with a question that's almost up there with sorry/s'alright among BBM controversies.
OMT shows no unequivocal sign of homophobia. He's a mean old bastard for sure, and he knows about Jack and Ennis' involvement ("I know where Brokeback Mountain is"). But he doesn't say one thing he might not as easily say about heterosexual lovers.
In discussing his sons' plans to ditch his wife and child in order to live with another man, his chief complaint is that Jack
never followed through. He could have used the help with the ranch.
Even by telling Ennis about the other fella, OMT is showing, in a weird backward way, an understanding and acceptance of their relationship. Again, he's treating them just as he would if a straight couple -- he knows Ennis will be cut to the quick -- and in so doing, he's normalizing their relationship, validating it (though not in a kind way, obviously).
The movie is about, in part, the idea that appearances can be deceiving. That's especially true when it comes to the dads. We're set up to think of Ennis' dad as a good guy ("My dad was a fine roper," "I think my dad was right"), but later learn he was a potentially murderous homophobe. On the other hand, we're told Jack's dad was a jerk ("Can't please my old man, no way," "never taught me a thing, never once came to see me ride") and in the context of this movie and the culture it portrays it's natural to assume that OMT is specifically a
homophobic jerk. But surprise!! He's not. The two fathers, in a way, follow opposite trajectories of character development.
I also think it's important that nobody who knows about Jack and Ennis reacts in the way Ennis would expect and fear. Aguirre doesn't fire them. Alma keeps quiet for years. It's not that the movie is trying to show that cultural homophobia is all in Ennis' head -- Earl's murder is a powerful reminder of its very real threat -- but the movie wants to
focus on the homophobia in Ennis head, to show how the destruction of rural homophobia affects not only lives but also souls.
I see Mr. Twist as a grieving father, albeit an obnoxious one. In denying Ennis the ashes he's saying that Ennis doesn't deserve them -- he let Jack down, wouldn't commit, wouldn't become part of the family. Jack's ashes are going in the family plot, because Ennis has not earned the right to take a role.