Ah, but then as I said it makes a little more sense when compared to 49ers, where we see the young Steve desperately struggling with his sexuality at age 16, just after finishing the war. There's definite sexual interest from the older man, but he merely tells Steve that he is gay and gives him the choice of whether to hook up with him or not. After Steve awkwardly finding out that he's not into girls after all, eventually he chooses to go with Wulf. After that, they clearly show romantic rather than sexual interest in each other.
Interestingly enough, I think what Moore was going for was to have this scene pair up with the deliberately similar finale of '49ers', where Wulf is visited in hospital by Steve. Steve begs Wulf to 'stay with [him] forever'; the older, cynical German says that it's merely because it's Steve's first relationship, and that the two of them are as likely to last as this decrepit city full of super-freaks.
This, of course, creates a stark contrast with the Neopolis of today and the Steve & Wulf of today, where it's Steve being more downbeat due to his job as a cop and Wulf being more positive because he's found love and happiness that he thought wouldn't last.