A few points on the topic.
Using the word Nazi to describe the NSDAP is perfectly fine, as it's the common English name of the party. Using the word Nigger however except in a historical sense to quote an author of the time (which I highly doubt anyone on Tremulous is doing) is obviously done to incite, because nowhere is the term Nigger seen as anything but inflammatory.
One of the server rules states to avoid demographically insulting terms, ala "Nigger" "faggot" etc. I agree with this rule. First of all because these kinds of words are directly offensive to a general group of people especially, even if it is not targeted at them. There is a difference between curse words like fuck and shit and these words. Tremulant is right when he noted that "when they feel that being black, gay or jewish, for example, is something negative and therefore a perfectly usable insult, that bothers me a little."
Most of the first type of insulting words are ones which are using traits as insults against people, things they do not have control over. Someone does not choose to be black, or a woman, or Jewish, etc. Targeting someone for something like this is obviously harsh, offensive, and derogatory. Being a Nazi on the other hand is a choice that one makes. People who espouse Nazis beliefs obviously also lack sympathy from reasonable people, and so it is not viewed as badly to insult someone who chose to be a Nazi rather than someone who chose to, say, perform in band.
There was already a large discussion about a very similar topic before which I commented on. I will usually mute for usage of words like Nigger because I find it very hard to believe that you can, in good conscience, use that word in any purpose but to insult. Other similar words like faggot fall under the same category.
These words can lead to muting because they are most often a form of harassment and used to hurt people. If someone starts saying to someone else "you fucker, piece of shit" etc, in a serious and insulting way, they are creating an unsafe environment by insulting someone, and may likely get muted too, as I see the #1 goal as an admin is to ensure the enjoyment of as many people as possible on the server, by creating a safe environment, keeping the teams level, getting rid of greifers etc. This is another way to do it.
But really, this whole debate shouldn't be needed. Yes this is a video game. Yes it is online. People online are not known for showing restraint or maturity on any level. It's the nature of anonymity that allows people to lower themselves to the level they do. And from my experience with Tremulous, while there are many intelligent, mature players and forum goers, there is also a very high percentage of those who fall into the immature insulting level. That doesn't mean that you have to act that way. If someone harasses you ignore them, and/or ask an admin to help you out with a situation. We may not mute someone if we think you are overreacting, but don't feel afraid to ask for help, that's why we are here. And on your end, really, don't be a dick. The fact that we have had two threads of large size for the tremulous forums is a bit, well a won't say disappointing, because as I mentioned, I'm experienced, but still, don't call people Nigger or Faggot, or anything. Try to avoid insulting people directly when possible. The point of a game is to enjoy it. Let's aim for a little more of that and a little less of an all out 6th grade war hm?
I think that about covers my views.
Edit: by strange coincidence, spork posted, while I was typing, part of my summary. "Don't be a dick." Really, it's true.
