The most important development for me, in queer cinema over the years, has been the broadening of the genre to include queer themes and characters in films that showcase something other than a romance or romantic relationship. For me, the most interesting films were Heavenly Creatures, Priscilla, Queen of the Desert and By Hook or By Crook due to the themes of horror or friendship superseding the importance of the queerness (I also really enjoyed the two documentaries, The Celluloid Closet and Paris is Burning because of the break from a romance narrative).
I see the future of queer cinema moving toward this. The two biggest budget and most mainstream films we watched (Brokeback Mountain and The Kids are Alright (and indie film, yes, but starring some big names)) were so intent on showing romantic relationships between queer people. This is fine, I suppose, but very limiting. While it's important to have queer romance legitimized by widely-watched films (I had typed "by the Hollywood machine," but it sounded too cynical), I think it's more important to have queer existence legitimized next.
This means increasing numbers of queer characters (as well as queer actors and directors!) in "mainstream" films, where their identity or orientation are not the focus, but rather, a no-big-deal detail or a facet of an otherwise more complex story. It means that the audience doesn't get stuck on what these characters do when they're naked together, you know? Expression of sexuality is such a narrow way to see queer people--and it's something that queer cinema has managed to get past. Now hopefully the rest of filmmakers can, too.