would not do that with the P-word, and certainly not the N-word. Which suggests a hierarchy of offence: a hierarchy that exists even now, even in this book that I’m writing. Yid is considered not as bad hate speech as the P-word or the N-word.
In this case, I think the difference is not a hierarchy, but that a group can use their slur but those outside cannot. We don't use either word for the same reason I wouldn't use the Y-word (or a F-word frim an Irish context) but you can use it, especially in illustration. I actually agree with the point that people would use it, but I think the logic is a bit weak here simply because groups do use language outsiders shouldn't.