This is a tougher one than it seems a priori, imo.
I have the deepest sympathy for this woman and I hope she is granted asylum upon legal appeal.
However, I can see how if this is possible, other people who are not in fact homosexual may try to seek asylum under this umbrella. How does one prove they are gay to a judge in a foreign country where none of your personal relationship history lies? I wonder if this is the underlying suspicion behind this initial ruling....
If not, and the court definitely recognises her homosexuality, and the realistic dangers this procures in Libya (simply by living a life and being of a sexuality protected by the ECHR), the decision is despicable and a shameful reflection on the judicial authority that made it.