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While I haven't seen Tropic Thunder, I'm not offended by the use of the word "retard" because I don't think of my daughter that way and I don't think a lot of other people she comes into contact with do either. As more and more people become educated about autism and other "developmental disablities" (which is the term that best describes the situation) words like "retard" become less and less related to my daughter or other kids with special needs.
That being said, my son got really mad at a friend that called another kid "retarded". He said, "Hey, my sister has special needs!" His friend didn't see the connection between "retarded" and my daughter, so maybe it just points to the fact that kids use "retarded" when they really mean "stupid".
In any case, I think it's a waste of time to focus so much energy on a word here and there. We'd be better off, spending more time educating people of all ages about developmental disabilities because it makes them more acceptable and common, and less conditions to be feared and stigmatized.