I would have to agree that it all comes down to intent. About ten years ago, I saw Jerry Jerry and the Sons of Rhythm Orchestra (a cow-punk band from western Canada) play at a club in Toronto. One of their songs, No Ass-Tatoos in Heaven went something like this

well he loaded up his pistol
and he loaded it some more
he loaded up on attitude
and barrelled out the door
three days without sleep
and then he hadn't ate in five
he was mean and he was rotten
he drank to stay alive

kindness was a word he'd say
just before he'd spit
happiness was just for people
who were full of shit
he was feeling mighty mighty
in his ugly ugly head
he got halfway down the driveway
'fore the police shot him dead

in the office of the coroner
they stripped his body nude
though he was still long on ugly
he was short on attitude
he had a lot of tattoos
that were covered up in blood
one said "make it whiskey"
one said "elmer fudd"

one said "you've got that
commie nigger china jewboy smell"
one picture had a caption saying
"I'll see you in hell"
one was a sketch of elvis
urinating on a queer
the tattoo on his ass
was far too gross to mention here

well you can cry and beg forgiveness
try to lead a pious life
you can promise to be courteous
and faithful to your wife
swear you'll not repeat your sins
renounce your evil past
but you can't get into heaven
with a tattoo on your ass

you cannot bring in records
you can't sneak in a friend
pop and dope and cigarettes
all that comes to an end
you cannot bring in liquor
or a chicken or a drum
and you can't get into heaven
with a tattoo on your bum

bum de bum de bum bum

Now this club had an extremely mixed crowd (Jerry Jerry was actually the opening act for Bootsauce; I was there for Jerry Jerry, my roommate was there for Bootsauce). But when Jerry hooted out the most potentially offensive line, the cheer of joy from the entire crowd was almost deafening. This was an example of a good use of the N-word. It was being used to degrade an ignorant whitie.

However, despite that realization, and my love for that song (a wonderfully infectious tune), I've never had the balls to perform it in front of anybody.

Paul.