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Names can kill. I referred earlier to the young learning disabled lad beaten to death by his "friends" who used those names and de-humanised him by doing so making it easier to abuse him. The names we call people trivialise them and reduce their humanity, making it easier to objectify them. Interestingly, Barry, I was listening to a BBC Asian prog shortly after the Pword incident and there was considerable smart debate about reclaiming the word, in the same way Dyke and Queer have been reclaimed and thereby reduced their power to hurt. Somehow, though, the idea didn't take, as the word had been used so much as a weapon that it was felt too sensitive yet - perhaps in the next generation. And you are right, up to a point, about context, in the same way a Jew can tell Jewish jokes in a self-deprecating way and so on. There is a Pakistani designer whose label is PAK1 - he feels ok with it, some Pakistanis, usually the older ones who have suffered more of the horrible abuse than the younger ones (mercifully), do not feel comfortable with it. But it is for them to decide, not others. Whites have no place deciding what is and isn't offensive for non-whites.
