In parts of England, there are regional variations on the phrase which create potential for amusement.
For instance (as a Northerner) when in the South, someone may ask you if they can "bum a fag" or "ponce a fag". You'd know what they meant, but you'd be tempted to snicker...
In English supermarkets, you can buy "bacon faggots" (though they're often sold as 'bacon bites' or 'bacon nuggets' nowadays), which are like chicken nuggets, but made with processed bacon.
As far as I know, the use of the term 'faggot' to describe homosexuals originated from the "bundle of sticks for burning" definition. The implication was that the only thing that homosexuals were useful for was as fuel for the bonfire.

