Well, we've had some good discussions on this subject, and I think the opinions covered the spectrum. I tend to edit around the racist references if I want to sing the song for its merits as a song. If I'm singing it as a demonstration of the attitudes of the time, I leave the racist stuff in.
I think there are plenty of good songs from that era that just couldn't be used any more if they weren't edited a bit. I understand the original "Shortnin' Bread" starts out "two little niggers, lyin' in bed...." I don't think it's a horrible betrayal of accuracy to sing it the way I learned it in the 1950's, "two little children..."
Take a look at "The Cat Came Back" at the Levy Sheet Music Site (click here). It's a great song to sing with kids, but I sure wouldn't sing it to kids in its original version.
-Joe Offer-