So what's the deal with the whole 'Bonnie Situation'?

I always thought she didn't actually exist and was just an excuse for him to buy women's clothes.

I think it's supposed to be any of those. It's ambiguous so you have to come up with your own conclusion.

He talks about her a lot, but no one sees her, and she's never around.
He acts flamboyant, but never outright gay.

So, really, any of those can be accurate.

I think its pretty obvious he made her up to hide the fact that he's gay. He was in the navy, went to New York to become a dancer/actor with his tube of chapstick and a dancing belt. He buys most of 'her' clothes. He gets his legs waxed. He hits on Johnny, gives him his private number. And we never see her, not even at the show or when he goes back to New York to open up a shop.

Its never mentioned specifically, but its implied.

Well, although it's not "canon" Guest mentions in the commentary that the original ending would have had Corky and councilman Steve "rooming" together in New York. Guest said he decided for a more downbeat ending.

For a minute there I thought someone was mixing up two different movies. I always thought "The Bonnie Situation" referred to the Pulp Fiction episode where Tarantino's wife Bonnie was coming home soon and might find "gangsters doing their gangster thing". Something like that. Whew.