I think there is some reason to avoid the usage under discussion. People with mental disabilities mostly know very well what the word "retarded" means, and know that it applies to them. To some extent, they must own it as part of their identity, (in a way that they don't have to own idiot or moron)- so it's galling or hurtful to hear society use it as a casual substitute for those other epithets. Friends and family may be saying, "No, you're not stupid, you're different" (or whatever), but elsewhere they are hearing that word (which they can't help but identify themselves with) and it seems to mean stupid, worthless and incompetent to the larger social sphere. Moreover, people saying it to one another are often expressing impatience, contempt and disregard for their target. ("You lost the keys? What are you, retarded?") The disabled person overhears and thinks, well, that includes me too. I suspect this is what the effort is trying to raise consciousness about.
By rough comparison, it's a bit like hearing someone denigrate somebody else by saying, "What are you, a woman?"
So, I'm in sympathy, but then, I'm an oversensitive doofus.
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