My opinion is this, Yes it's a pretty bad and instigating word, but the internet is always going to use it. The only good thing allowing it to be said is showing ones character in a negative way. So you'll know that person(s) personality behind any false pretenses. When staff isn't online it's just going to be used just as much cause that's what most do anyways. By having it be a "forbidden word" it'll just instigate and challenge people wanting to use it more and more. Allowing the word to be used has a better chance for it to "die-out" of its use by the shit-starters. By all means if it's offending you or you feel targeted just let someone know and it'll be dealt with, it's the same protocol in any work environment when involving harassment/discrimination.
I'll be honest. I wouldn't ever use it but some people do. If they want to say it in a non-harrassing way it's their choice
Restricting speech is a slippery slope, this type of speech toward someone should be treated under the harassment rule.
To be fair this server wasn't really known for freedom of speech and freedom of expression to begin with. If I may add the N-word was only allowed because someone wanted to get themselves out of a ban by abusing the wording of the rules by saying "technically it's allowed to be used this way".