I read about the etymology -- we concluded that early on in the discussion but the point was that there's a recent usage different from it's dictionary definition. I think urbandictionary is perfect to illustrate this sort of secondary usage.
Also, the salad example is a bit weird as sexual innuendo and racist slurs are beasts of a different kind as there's usually a specific target to ethnic slurs as opposed to innuendo like "laying pipe" or "tossing salad."
But I agree that there's a limit to such sort of political correctness. In this case, for example, it's clear that I'd never ever use "niggardly" in any context whatsoever (and I'd find a writer that does tremendously ignorant) but I can see that the word "niggle" is a bit more on the fence. And I've seen it used on Engadget & other blogs, even if magazines and newspapers won't do it.
Personally, I think it's wise to avoid it as I have heard it used in a tremendously racist way. And again, everyone has different experiences in this regard. I do think, however, that it's a bit odd to get offended when someone points out this kind of usage. At the very least, we know that it's happening.