In "That Strange Gaucho Who Fancied Himself as a Writer," how does the Colonel end up seemingly offending Liz?

When the Colonel reveals Martin's homosexual act, China Iron sighs with relief. The Colonel misinterprets this as shock and remarks that China Iron will soon learn that people do all kinds of things in bed. He then asks Liz to excuse his bluntness, but says that as a married woman she is probably not easy to shock. She appears to take offense at this and storms out.