Real life slurs should never be used in an RP server or AT ALL for the matter. Usage of such degrading terms "in taste" is not acceptable. There is no way to do so. Slurs are slurs for a reason, and the fact that this behavior was brushed off in such a manner also makes Moderation look worse than they already do. How can you use a slur "with taste"? By separating yourself from it? Easy for someone to do when they've never had to deal with something of the sort.
It's ridiculous that this is a "open conversation" instead of it being an important and enforced rule not to use real life slurs in RP. Made up ones that fit the server? Fine. Made up fantasy world, made up people, made up slurs for different races. However, an actual slur that is harmful to a real individual who could have already dealt with this before in their life? Absolutely not.
Why is it that people like this are given safe spaces to makes distasteful comments and get away with it? It's almost like Moderation wants the decline of LoTC and the reasonable side of the player base. The usage of real life slurs should NEVER be a slap on the wrist.
Deflecting or shifting the blame doesn't help either. No side was right when using harmful terms to either person. As the Mod Admin, you should know that placing blame on the opposite is only going to cause more problems. Stop being the fuel to the fire and actually do something to put it out.