The little dust-up over Prince Harry's racist remark seems way overblown to me. If he meant it in a derogatory way then obviously it's unacceptable, but his explanation--that he meant it in a friendly way to a member of his army platoon--is totally believable. People would be shocked at the things men call each other when they're horsing around, or when they're in a group together (like a sports team or, yes, army platoon). They call each other things that would be normally offensive to a lot of people for a lot of reasons, but in context actually show affection.
If Harry had no malice when he said it, and the other guy wasn't offended, then all this feigned outrage is ridiculous. Any utterance of a particular word is not automatically offensive--there is such a thing as context, even for words that are often used with a racist or nasty intent. All of these people being outraged and offended on this guy's behalf are full of it.