This is an odd thread with a bunch of comments that don't seem to understand what went on or what's going on.
Paul Reubens was arrested in a sting of people engaging in sex activity in a porn theater. It's illegal because many jurisdictions prohibit sexual activity and/or nudity in public spaces, even explicitly sexual spaces. I don't agree with this but that's what it is. These sorts of arrests were more common a few decades ago but still happen in certain parts of the US. A local bath house cannot permit any nudity in any public portion of the facility due to laws like this.
News reports state that a few people were arrested at the same time Reubens was. He wasn't sought out. In fact some reports suggest that the police didn't know they'd arrested a celebrity until he told them who he was (he was not in makeup and costume when he was arrested). Reubens had been previously arrested for loitering at an adult theater nearly a decade before the 1991 arrest.
R7, the dirty theater days are still with us. After a period of decline, people are tired of the apps, which have made people more unfucked than ever. They are returning to adult theaters and bookstores and bath houses, because they know the people there want to have sex. Bookstores and theaters where I live are very busy, charging higher entrance fees than ever, and the bath houses occasionally are full to capacity with a waitlist.
As R16 said, vice laws were definitely used to selectively prosecute gay men. In some cities civil lawsuits were filed alleging discriminatory policing - straight couples were never arrested for having sex in a park for instance, but gay men were. Discovery for these lawsuits proved that there were no public complaints about sexual activity in the theaters and parks in question - this was a lie to justify the waste of scarce policing resources to harass gay men. And the gay men were often enticed and entrapped by plainclothes officers. This bullshit has ended in many but not all parts of the US. Adult business owners pay bribes for protection in some cases. In other cases, adult businesses are left alone by police because they are not a public safety risk.
In most places I've lived and visited, bath houses and some adult theaters are membership required spaces, meaning they are considered private, not public spaces. These clubs usually require registration and payment of a fee. Nonetheless, where I live, membership in a club like this still doesn't permit nudity in the open, 'public' parts of the club, only in private rooms. Same with the theaters, which only permit nudity and sexual activity in separate, closed viewing rooms.
R14 and R24, you're ignoring an important part of the theater experience for many, which is exhibitionism. Reubens didn't want to beat off alone to a video. The Marine didn't want to beat off alone either. They both either got off on being watched, or they were advertising their availability for further sexual contact. As for the men watching the Marine, they were not fully heterosexual, and/or they get sexually aroused by seeing other sexually aroused people.