It's a fairly complicated issue because there are just so many conflicting opinions on it. Downright prohibiting the use of the word is not only a genuine violation of the First Amendment but even if it wasn't, making it illegal to use the word won't prevent its use. In this country, we all know good and damn well that whenever the government passes a law prohibiting the use of something, it usually causes more problems than it solves. The prohibition of alcohol didn't work whatsoever, people drank even more and it ultimately resulted in the dawn of organized crime in the United States as we know it.
Trying to prohibit something, such as the use of this particular word, won't work because, as another poster mentioned, there's an enormous taboo associated with it. On the surface, it should be a simple thing to just discourage the use of the word altogether but, surprise surprise, human beings have this almost supernatural tendency to make things much more difficult than they have to be. Some black people believe that by embracing the word to be used exclusively by the black community are of the opinion that they're taking power from the word itself, but this often results in a double standard when you consider that the rap/hip hop music industry prominently markets and features the word knowing full well that some 70+ percent of the people purchasing the music are white. So, by the thinking of those who embrace the "it's our word now" philosophy, it's racist no matter what the circumstances are. Others in the black community feel it's a shameful word regardless of who uses it, they feel it's a sign of ignorance and frequently criticize their own community for using it. Some people of all color believe it's just a word and only has meaning if anybody assigns meaning to it.
As with anything else in life, there's no single, definable, all unifying theory of what "truth" is. A fact is something that's truly, 100% known by everyone (i.e. Earth is round, it revolves around the sun, that it isn't the center of the universe, etc.). Usage and philosophical view of the word "******" can be a fact to some and a matter of personal perspective to some others. For instance, since I'm white, there are some who would say that I have no right to decide whether or not it's socially acceptable for blacks to use the word, which is a view point I'm sure that many black people would hold and some white people as well. I'm of the opinion that if you don't want to run the risk of insulting people, maybe it's just best to avoid using words that are generally believed to be racial slurs altogether towards all people. I alluded to a double standard earlier that exists and using racial slurs directed towards white people is something that seems to be acceptable; while I know that racial terms like "cracker", "snowflake", "honky" and some others don't have the history of "******" behind it and that those words are also quite common and have other obvious meanings. However, I think we're all intelligent enough to recognize when they're being used in a racist manner and, to me, a racial slur is a racial slur.
Let's just be real about it, I'm of the opinion that racism is despicable no matter who it's aimed against. The words and terms discussed in various posts are words that can be used to express personal disdain towards someone of a different ethnic origin, the words themselves are meaningless as they're expressions of personal racial bias. You can't know what's in a person's mind, none of us are mind readers, so how can a black person really know that a white friend calling him a "******", "*****" or however the frig you want to pronounce it is doing it in the spirit of friendship because he's seen and heard blacks use it so casually? He can't but, then again, it goes back to that confusion that's been created by music, movies and TV, so, as I said, maybe it's just best to avoid the friggin' thing altogether, be done with it and truly, 100% take away any power associated with the word.