As far as recording it on a CD, I'd say it's your call.
As far as performing live, my personal feeling is that it depends on the audience. There are no circumstances under which I'd use the N-word in a song. Sorry--I don't care about the historical context or my own intent, it's way too charged (especially in this part of the country). I might explain before hand that that was originally in the song and that I had changed it, but I wouldn't sing it. And I wouldn't use any ethnic epithets in front of children because I don't want to be part of making them accustomed to hearing them before they're old enough and educated enough to know the context.
I don't mind singing about alcohol, tobacco, drug use, or most of the sex references. I avoid some of those songs in front of certain audiences all together rather than change the lyrics, but I don't do ethnic epithets. Yes, I agree that it's at least partly the "fault" of the audience if they're offended, but it's not like I cannot anticipate that somebody might be, in fact, very deeply offended. I'm not a part of any ethnic group for which really offensive epithets exist so I don't think I can fairly say I understand how it feels to hear the N-word used for entertainment.