Personally, I feel very uncomfortable using that word. I hate PC stuff too, but whenever I say that word, I just feel . . . wrong. I don't think it should be illegal or anything though, but I would definitely consider it almost like a cuss word.
I believe you are describing the effect of persistent social pressure applied in the interest of censorship. The discomfort you feel is the first stage effect of inculcated conditioning -- commonly called
(brainwash).
While it is offensive to call someone a niggar there is absolutely nothing wrong or offensive about using the word in an academic context, as the President did. To
forbid the use of the word under any circumstances is simply an exercise in presumptive
authority and should be ignored.