Father James Alison -- a practicing Catholic and theologian in Madrid, and who's openly gay -- shared his POV on "TMZ Live" Tuesday ... explaining when the Pope speaks to Italian bishops behind closed doors, he's most likely addressing a group primarily composed of gay men -- with FJA theorizing he's likely fully aware of their sexuality 'cause he lives with them.

Therefore, Father James says he likely used the term in a positive/light-hearted context, among people he knows, rather than in a negative way typically associated with the term.

Father James speaks from experience ... noting while he hasn't used the exact slur the Pope did, he's used similar terminology in talks himself, which might traditionally be deemed offensive -- but stands by his thoughts that it's really no biggie and nothing worth sweating.

But back to the situation at hand -- Father James explains it like this ... he says among bishops, there's usually a group of gay men who hypocritically believe the Church's ban on gays doesn't apply to them personally -- but they don't have any issue imposing it on others.

As we reported, the Pope referenced "fa**otness" while defending the Church's ban on gays becoming priests during a discussion with bishops behind closed doors at the Vatican last week.

Vatican spokesman Matteo Bruni issued an apology of sorts, saying ... "The Pope never intended to offend or express himself in homophobic terms, and he extends his apologies to those who were offended by the use of a term that was reported by others."

It goes without saying, the backlash over the Pope's comments was significant ... with even Wilson Cruz -- a gay actor known for his roles in 'Star Trek' and "Mother of the Bride" -- speaking out to TMZ Tuesday and crapping on his holiness' slip of the tongue.

Cruz expressed disappointment in the language used by the Pope, especially considering his role in leading discussions on change within the Catholic Church.