The only logical arguments I've heard for not letting kids swear are:
- It's against the social norm (it'll get them in trouble)
- It lessens the words' value.
Since kids invariably will encounter swear words at some point, trying to shield them is pretty hopeless. The best solution is to mitigate the two problems above; teach them when they shouldn't swear (mainly in front of adults) and not to swear like a sixth-grader ("Hey, man, what the fuck are you doing today? Shit, I've got a fuckton of goddamn homework.")
Swearing at people is another thing entirely, though.
I think I'm done now talking about swearing on Hacker News.
That said, there are boundaries that she understands clearly -- she's not allowed to use curse words at school, for the same reasons I choose not to swear at work. She knows and understands that it isn't an appropriate place to use foul language. At home, she's free to use whatever language crosses her mind.
She is also not allowed to curse AT people anywhere, because it's mean.
She's a smart, responsible, well adjusted child who rarely uses foul language. Occasionally we'll hear something like "I can't figure out how to work this damn thing," when playing on the Wii, but she doesn't run around like a Tourette's sufferer either.
I'm not saying that my way is the right way. It might be, and I suspect that it is for my daughter, but I don't know you or your family. The premise for my ideology focuses around 2 things: 1) I don't want to be a hypocrite. I curse all the time, and while I'm mindful of my tongue in professional / social interactions, I do use foul language, and 2) I was more worried about banishing expletives making them into a forbidden fruit.
From watching people grow up in my generation under the same sort of philosophy, I've seen them develop the mind set that anything put forth by authority must be correct, and in the process hold obviously contrary points of view without batting an eye. One of the causes I've been able to gather is that they spent a large part of their growing years being told how things are and to accept that as sufficient evidence, but not having what is asserted jive with their own impressions. Enough of that, if they don't rebel they develop the sense that their own impressions and intuitions are completely flawed, and should never be trusted without someone else to tell how things are.
I'm not saying that you are wrong to enforce a no swearing policy with your kids -- that's an entirely different discussion that you have already said you don't want, so I won't push for it. But from my teenage perspective of not so many years ago, I can imagine being very different -- less curious, less assertive, less independent -- if my parents had been more authoritarian, and not to be harsh but less reasonable, approach to setting ground rules for my behavior.
And I agree, there is a difference between thinking for oneself and learning about boundaries. Except that I could imagine my 10-12 year old self wondering why my primary role models seemed to be demanding one form of behavior, and then exemplifying a different form. At this point, I could only imagine thinking a boundary had been placed on where I was allowed to think for myself. They'd seem like boundaries for the sake of having boundaries. Maybe you see it differently or don't care what I think, but I'm still confused.