What hasn't been mentioned, so far as I can see, is the issue of context. By and large, these songs are performed to self-selecting audiences with a particular interest in folk song, most of whom have some understanding of the origins and the contexts in which these songs were created. In my experience, most songs (and not just those which could be offensive) are usually introduced in a way which explains this. These are not songs which the general public is likely to come across without explanation or preparation (unlike performances of morris or mumming plays). By and large, this is a specialist audience of grown-ups who understand the context in which these songs arose and in which they are now being performed.

Furthermore, one of the attractions of folk music is the insight it gives us into the lives of previous generations. It should also be thought-provoking, which means it might sometimes offend some people. So I don't agree with those who say racist songs should never be performed. However they should not be performed casually and without thought to how an audience might react.

The use of outdated language does not in itself make a song racist. Again, it is a question of cotext. As Hugill pointed out somewhere, "nigger" as used in shanties was simply the commonplace term among sailors (he also points out that many crews were multiracial and generally got along well). It is hardly ever, if at all, used offensively. I would see no problem at all in using it in a specialised shanty session, but wouldn't use it in a general folk club without a word of explanation. The seaside shanty choirs who perform mainly to visiting holiday makers should probably avoid it