What a ridiculous discussion.
Some terms are, among reasonable people, recognized as racial epithets, particularly when they are used in a context which displays them as racial epithets (as iamzack did). There is no excuse for it, and personally I tend to think that anyone so ignorant and callous has no place in a community of reasonable individuals.
Did iamzack intend it that way? Perhaps not. But it was used in that context (and no, ironic usage doesn't excuse it). A warning with the threat of a perma-ban if she persisted is perfectly reasonable.
Frankly, I am absolutely astounded at how many people are leaping to the defense of use of this kind of language in any context. And for the people throwing things like "Yank," "redneck" and "Limey" out there as examples as well, grow up. You know perfectly well that there is a significant difference between racial epithets historically associated with oppression along social and racial lines and derogatory names for particular national or regional groups. And if you don't, go ****ing educate yourselves and get back to us.
Anyone who can defend the use of racist terms in any context needs a good smack with history. It displays your ignorance, and it's offensive.