Some of my otherwise brilliant friends use the word retarded as a pejorative. Many of my students do the same. A couple of years ago I tried to figure out a way to get folks to stop saying it. I first decided to reply to, "That's retarded" with, "Like my brother?" The problem being that I don't have a brother who identifies as retarded - in fact, I don't have a brother at all - and using, "Like my sister?" would have felt weird since I do, in fact, have sisters. I also thought being disingenuous was probably not the best approach. So I've started using, "Like my students?" That worked for a little while because I did teach a weekly literacy class with students identified as mentally retarded when I was teaching in NYC. Now that I'm a special education teacher out in Oregon, I don't actually work with students labeled mentally retarded. I've still been saying, "Like my students?" though because it's easier than saying, "I really wish you wouldn't use that word because it's offensive." Of course, the latter doesn't ruin anyone's day whereas a few times I've dropped "Like my students?" on someone I didn't know well and it really bummed them out and made me seem like a jerk. I don't mind coming across as a jerk for a good cause but I think it was mostly counterproductive. So I may be forced to be all mature about it rather than snarky.
Of course, none of this works with my students who say the R word all the time. They also say, "That's gay" constantly. However, given that my students have a host of problems I generally don't make an issue out of their use of either of these words as epithets. There are bigger (tofu) fish to fry, as it were.
I think I should point out that being literally retarded - slower or delayed when compared to the average - is mostly irrelevant much like being black or gay. But when we say, "That's retarded" or "That's gay" when we mean "That's really dumb" or "That's really uncool" there is no difference from saying "That's black" to mean someone about being really athletic but prone to crime and poor in academics or saying you're going to Jew someone down in order to get a better purchase price for something. So using those words as insults is insulting the millions of people who use those same words to describe themselves. You dig?