There is, however, reason to use the many synonyms in English in ways that are considerate to innocent people with severe problems.
Edit: and by the way, this has nothing to do with being considerate, as a human being, to another human being.
As a factual matter, I'll agree with you that the attempt to replace such terms as "degenerate" (a term I heard in a movie about politics when I was young, having no idea at first what the term meant) with terms with more favorable connotations such as "gay" often fail if the underlying societal prejudice is strong. (The term "gay" currently does seem to be transforming from a term of voluntary self-designation to a term of derision.)
But a writer still has the choice of using the least offensive term available to the writer, for whatever that is worth. And I think there is a legitimate underlying factual distinction between being "retarded" (physiologically incapable of thinking as a normal adult does) and being "stupid" (perhaps being too lazy to apply adult thought to important issues).
It's interesting that the nitpickers usually pick on informal language (slang) because that's where language is least encumbered by preconception. To try to reform society by purging usage is like telling characters on TV that they ought to do things differently: the show finished production before you even knew about it (and oh yeah, the characters can't hear you).
Language is marvelously protean. New currents and wellsprings are bubbling up all the time. They're considered ignorant and incorrect until they achieve critical mass. There's nothing to be gained, unless one has the ego of a schoolmistress, from moralizing about this. (On the other hand, I'd say there's a good deal to be gained by stripping down official language in the way that Orwell is known for.) Although I shouldn't be so hard on these people; they make great comedy possible.
By the way, you touched on a hobby horse of mine. The word "gay" is such a fascinating case. It's shifting its meaning again, from "homosexual" to "lame". The sensitive cultural critics behind South Park captured this perfectly in their line, "this is gayer than sex with men". What's fascinating is that this is happening just as our society is becoming tolerant of homosexuals at an astounding historical pace. It's as if the straight world is striking the following bargain: "you can get married, but we get the word 'gay'".
I think The Simpsons beat them to that one: "You kissed a girl! That is so gay!" (said to Nelson Muntz by one of the other bullies)
Also, having sex with men doesn't necessarily make you gay. :-P
Good find re the Simpsons! I will remember that one.
Edit: what I love about those two lines is that not only are they equally brilliant, they are brilliant in a way that captures the difference between the two shows.