No one's any bigger if they use the word "n*gger"

Several months ago, there was a lot of publicity criticizing the latest celebrity to go off on a "N-word" rampage. Since all those happenings sort of jumble together, I got to thinking about some underlying issues.

Now, before I explain my thoughts, let me just acknowledge that I do not deem it appropriate in any context to use the "N-word," except perhaps for carefully planned lessons on history whose sole purpose is to educate in a neutral way. Personally, I wouldn't use the word in my everyday life (n*gger) or with friends (n*gga); I also don't listen to music that uses those words (not necessarily because of that word -- it's just not a favorite of mine).

But what I'm wondering is, is it ever "okay" to use that word? I'm not saying I would, but it's common knowledge that people -- many of whom are of the African-American persuasion -- refer to each other as "n*ggas."  Is it okay if they say it?  Along the same lines, is it okay if someone of a different race says it, even if it's meant in the same context (a la "homie," "pal," "buddy," etc.)?  When does it shift from being acceptable to being racist?

In addition to the word's usage in conversation, I'm wondering about the rules of song.  For instance, the "N-word" comes up frequently in music, oftentimes in rap.  If you slap a "Parental Advisory" label on the album cover, does that excuse the language inside the case?  If someone (again, either of the same or different race) is listening to the album and sings/raps along to the music, what about that?  It's not technically their words. It's like telling a story and saying, "And then the guy called the other guy a n*gger."  If you're quoting someone else, does that have any effect?

Even South Park tackles the subject, as seen in this parody of Wheel of Fortune.

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It seems my thoughts are more questions, in an effort to understand where people draw lines and make judgments.  I'm curious to know what you all think and, hopefully, we can get an interracial dialogue going so shed some clarity on the issue.