"Romance has been grabbed, like gay was grabbed."
If RWA owned the word romance, I wouldn't have any problems with this perspective. But the word has been used in the slash and yaoi communities for several decades now to describe the stories being published there. I think they have as much right to determine what is romance as the RWA does. Since the medieval authors aren't likely to come back and claim the word. :)
(The medieval scholars still do, though.)
The word romance has never entirely disappeared from the gay community either. So I'm not quite as quick to assume that the movie-makers were trying to tap into the enormous het romance market. They may instead have been trying to tap into the substantial gay romance market, which has never had a no-tragedies taboo. Quite the opposite, actually; the first modern gay romances were nearly all tragedies.
"As it is, I think it's just another example of heterosexuals telling homosexuals that they are doomed to fail romantically."
I won't deny that that has a played a large role in the development of gay literature. As a teen growing up in the seventies, I got tired of reading novel after novel in which the gay character died at the end.
But I think this is a matter of overuse, not misuse. Tragedy has played a central role in romantic literature, from classical times forward. Think Helen of Troy. Think Dido and Aeneas. Think Beatrice's death (though Dante managed to turn that into a Comedy). It's only quite recently that romance readers have begun to demand a happy ending. I don't at all mind readers saying what type of literature they prefer . . . but I do very much mind them saying that works which have been described for centuries as romances don't qualify, simply because they don't suit those particular readers' taste.
I just did a Web search on "Romeo Juliet romance," and turned up over a million hits. So there seem to remain a fair number of people in the world who don't believe romance and tragedy are mutually exclusive. :)
One of the pages I pulled up through that search was this one:
http://www.likesbooks.com/hea3.html
I thought it was a great discussion. This reader's comment fits my feelings on the topic: "Personally, I have always felt that the ending must fit the body of the work. As long as, at the end of a book, the characters seem to be heading in the 'right' direction, that is acceptable. My personal pleasure certainly increases with each indication that the h/h will stay together."
None of that is incompatible with what you said, of course, since the issue isn't what is right for the book, but what is the right label for the book. My perspective on the labelling issue is that having a single label - "romance," "gay fiction" - really isn't going to give you enough information to evaluate whether you're likely to enjoy the story. I've noticed that the sort of problem you describe - of readers/watchers being lured into false expectations - is a lot less likely to happen in the fan fiction community, where authors are more likely to warn if their stories depart from the norm. I think one reason that the ratings descriptions keep expanding so much in most countries (remember when all that we got was a letter or two to describe the movie?) is that people are hankering for the equivalent of fanfic warnings.
In the meantime, there are places you can go for this type of information about mainstream works:
http://www.nccbuscc.org/movies/b/brokebackmountain.shtml
"What gives the film its power is the vividness with which it tells the story of an unresolved (albeit objectively immoral) relationship, which has a crushing impact on the two men and on all who are involved with them and which, it should be noted, ends in tragedy."
The Catholic bishops are probably not going to be your folks of choice for movie recs. But I remember that, back when the movie came out, there were plenty of review sites out there that told that Brokeback Mountain was a tragedy - I stumbled across that information without looking for it. So maybe you could search for that next time.