drorco didn't say no one uses it as a slur, they were relaying their experience having been taught the word means no ill will. I don't really see a reason to try to prove his experience wrong.
I guess in English there are also such words that originally had no use as a slur but later "denominated" to racial slurs.
The reference to Kushi->Kof (monkey) is totally off. Doesn't sound similar at all for my native Hebrew ears.
A word is offensive in polite society because a population of people finds it hurtful, or because another population of people uses it in an intentionally hurtful way. Usually it's both. Innocent words can become slurs, and other slurs, over time, can become obscure and lose their power.
For example, the "n-word" in English obviously comes from the Spanish or Portuguese for the color black. Despite that, it's an offensive slur.
The older colloquial term in the English language for Romani people apparently comes from the word "Egyptian." There is no problem with being Egyptian. But many people find this particular word hurtful, and polite society is actively trying to retire it.
Maybe you have personal ideas about what "should" or "shouldn't" be hurtful, but I'm surprised that we don't seem to agree on how people actually use these words in reality. "Kushi" can be a slur even if your grandma's pet name for you was "my little Kushi" and you love that word to death.
I'm not aware of any societies without outgroups, are you?
I don’t think “black” “white” and “brown” can go away as descriptors like “blond” and “redhead”, but maybe someday they will stop being identity categories. America already has large non-native black populations in certain areas (West Africans, Somalis, West Indies, etc.), but I think the country still thinks of Black = African American = descendent of U.S. slaves for now, because the non-native blacks are still mostly focused regionally, like Somalis in Minnesota.
I guess this is another reason for the treadmill: distinctions that were implicit before maybe need to be made explicit as different things become salient.
Tl;dr your statement "The [euphemism] treadmill stops when you actually change public attitudes" actually means "The euphemism treadmill stops when you actually change public attitudes in such a way that I am personally comfortable with it's final state", because in reality the treadmill will never stop, someone will always push to keep it going, it's the reason why language shifts and changes over time.