It should be remembered tha the older singers often self-censored their own songs when singing them to outsiders.
We had a great deal of trouble getting one singer to sing a fairly innocuous-sounding song - 'The Bicycle'because he thought that some of the verses might be sexual references.
The 'racist' thing is a tricky one - I've always been pleasantly surprised at the lack of racism in the folk song repertoire.
I don't think this is due to the collectors censoring songs particularly, Cecil Sharp was happy to refer to the banjo as a 'N' instrument while working in the Appalachians, yet there are remarkably few songs in his or any of the collection using the word.
Songs like 'The Flying Cloud' express great sympathy for the black slaves being shipped to Cuba.
As far as singing the songs today, no singer is committed to singing the words as they were first heard.
Personally, if the term was an essential part of the song and couldn't be removed, I'd avoid it or any others that made me feel uncomfortable.
Jim Carroll

The Bicycle (Roud 5233)
Tom Lenihan Knockbrack, Miltown Malbay, Recorded 1977
Carroll Mackenzie Collection

You talk about having a bicycle hump,
I got a bicycle pip.
I bought a beautiful safety one;
And on my very first trip.
I ran right in to an old, old woman
Sure I nearly mangled a kid.
The crowd all gathered around me,
And what do you think they did?

Chorus:
They first took hold of the handlebars,
They twisted the diamond frame.
They pulled out the end of the patent valve
And it never will look the same.
They burst the bearing, they bent the fork,
Somebody smashed the chain.
They took all the wind from the inner tube,
And I never will ride again.

They bored a hold through my Dunlop tyre,
They smashed my detachable brake.
They stuck a spanner between the spokes,
And the squeaker they tried to take.
They spoiled the shape of the rust-less wrench;
The cox couldn't stand the strain.
They burst a cog and I lost my gear,
And I never will ride again.

Chorus

They told me my saddle was puncture-proof,
They pulled out the wick of the lamp.
They started in trying to ring the bell
And the gear-wheel got a cramp.
I started in trying to stop the bell,
The pump went into a drain.
It took all the oil from the oilcan
And I'm damned if I'll ride again.

Chorus

Conversation at end of song between Tom Lenihan and Jim Carroll:
Jim: Where did you hear that song?

Tom: Well to tell you the gospel truth Jim, I don't know where I got that; it's a hundred years old if 'tis a minute and I never sung it in any place because you wouldn't know the devil what it's about at-all or what, what sort of a song it is!

Tom got this from his sister Mary in America. He told us he could never make much sense of it and was reluctant to sing it. He said the same to Tom Munnelly when he gave it to him later and who suggested that Tom saw a double-entendre in some of the lines, hence his hesitation in singing it in mixed company.