Korkscrew, I can't speak for others but just speaking for myself, I don't get upset at all when I hear a non-Italian use the term "D***." The "W**" term, however, we consider the Italian version of the N-word because it means you came here illegally.
While I do not in any way condone racism, I also think the term "racist" has been cheapened because the term gets used way too frequently and as a means of convenience when someone is losing an argument. Just as an example, if I'm white and do not like President Obama, in some circles that makes me a racist. Or black gangster rappers can use lyrics about "kill the white dude" and no reprucussions are had but if a white country or rock artist says anything even remotely derogatory about another race and it's game over. All I'm saying is that regardless of what happened in the past we need to get away from the double standards.
Again, it'll be a long time if ever goes away. What bothers me most is that the term has been cheapened.