I’m not familiar with the groups, is this a name they go under? As in, does the lead motor have a flag or something identifying them as “Dykes on Bikes” or is it printed like that on a program (do pride parades have programs in the US?)
I think there’s a difference between calling someone a dyke and using a name a group of people have chosen for themselves. In the quote you copied, while I understand the train of thought, I think the author is trying to err on the side of caution. If that is the name the of the event, than there is no problem using the word as part of the name.