They needed to establish that Albert was easily offended, and a huge drama queen, which is why we had the big fight in the beginning over Albert's suspicions of infidelity.
But i thought it was still clear that there was real love between them. And yes, in response to the OP's question, they were supposed to be lovers. We didn't see much in the way of physical affection between them - I'm guessing the studio wouldn't allow it (this movie came out almost 15 years ago, after all) - but I thought the script, and the actors, managed to show a meaningful connection between them.
Plus, there was the whole scene with the palimony agreement, and Val calling them his mother and father, and Albert's jealousy whenever he thought there was even a chance of Armand being unfaithful (like when he was alone with Christine Baranski's character.) He wouldn't have acted that way if they were just friends.
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