This phrase was not coined or popularized due to its accuracy. It trips off the tongue and sticks in the mind so easily because it is a parody/corruption of the advertising slogan "RAID kills bugs dead". RAID commercials featuring this slogan, with a particularly enthusiastic and morbid voice-over, were ubiquitous in the mid-80's, when HIV was still being reported as a disease afflicting only homosexuals. RAID is still using this slogan today, apparently unconcernced about any negative associations. Thus both phrases serve to remind us that the armies of hate and consumer culture might as well use the same methods, since they share so many of the same homogenizing goals.
The population base of people willing to openly display homosexual hatred in this country is simply much larger than that of public racism (at least in the non-institutionalized Ku Klux Klan sense), probably because it is encouraged by the predominant religion. In addition, I can't think of any jingles offhand where a word can be replaced with "nigger" to form an endorsement of white supremacy, and I'm not going to waste anyone's time trying to come up with one. The puns just got lucky in this case.