Plane, you asked if context mitigates. In fact, context is critical to analysis. Cornel West said "Martin Luther King, Jr. was a negro who resisted niggerization." He also said, attributing the idea to Abraham Lincoln, "The nigger was an American invention." John Lennon said "Woman is the nigger of the world." In none of these contexts is the word used to demean African-Americans. It is used to point out how the race was oppressed (or, in Lennon's case, how woman were being oppressed in a similar manner).
"Woman is the nigger of the world" has a completely different meaning from "That woman is a nigger." "The nigger was an American invention" is different from "Some American niggers are inventors." And the use of the term "nigger" in this entire paragraph is well within reasonable standards of debate. One cannot, effectively, discuss the relative merit of the word (and the concept of context) without using the word. Now imagine if this post was selectively quoted in this fashion:
Stray Pooch said "Some American niggers are inventors." What a bigotted ass!
Of course the quote is accurate, but out of context it appears that I am deliberately using the word in an offensive manner, rather than simply illustrating an inappropriate use of the word.
Yes, Ann might have used the word "faggot" to illustrate a point. But she did so in a manner which accused Edwards of being a "faggot" and which used an obviously offensive word in a context which suggested the word should be considered acceptable. And let's face it, even accepting the fact that such humor has a receptive audience in like-minded people, her use of it was juvenile and silly. She should be slapped around copiously and then forced to have sex with Rosie O'Donnell. (See, that's how Ann would have put it had the shoe been on the other foot.)