It is in fact offensive to many people. In the original version the story is about a slave whose jobs it is to brush flies away from his master. HOWEVER, it is also a well documented fact that this song found it's way into slave culture and was enjoyed by slaves due in part to the death of the master and the glee of the slave over his new found position in life ( and freedom for the hated task).

Part of political correctness should not be solely to aviod issues that might offend, but rather to educate the offended. You will not convert all who are offended but you might educate someone in the effort.

To remove "The Blue Tail Fly" from you songlist would be to do two ill advised things: 1) You will loose the chance to play a song that was enjoyed by slaves and therefore (although written by norhtern whites) was a real part of slave culture. 2) You will pass up the chance to use the song as an axample of a shared musical tradition that could be used to bring balck and white audiences to a better understanding of how music is passed from one culture to another.

Some may be offended, others will be educated. I think that in light of the good that can come from this, better to play it than ignore it.