Words like "niggardly", very much too close to the offensive word "nigger", are taboo in the enlightened brave new world of today.

and...

Certainly by high school, niggardly on a vocabularly test would be fine.

...seem to be in conflict.

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Is there any other instance of an offensive term being used by a group that will not tolerate its use by members outside of the group?

Ayleurs.