Yeah reading Harry Potter through an adult lens, and understanding what the conflicts were there to symbolize, it really makes you wish the author had thought asked "Does this children's book need a eugenics plotline?" and if so, "What does it need to say about eugenics?" Though last I checked the author is still arguing historical claims about the holocaust were exaggerated, so I'm not sure her convictions.

Wasn't muggle also a derogatory name? Some characters were wary of using mudblood but no one had issues with muggle.

It was more or less treated as the least-pejorative way of saying 'non-magic-aware' (in a similar-ish sense to 'Gentile'), but it seems like there's no way to have at least a little bit of negative implication given what it's denoting, and there's absolutely a sense that most wizards and witches consider themselves superior to the muggles.

Whereas 'mudblood' was specifically a slur against those of mixed heritage.

>'mudblood' from harry potter a bit, also from pop fiction -- and similarly considered harmless

Considered harmless? The entire point of the "mudblood" slur is so JK can clearly signal who agrees with the literal Wizard Nazis! Anyone and everyone says "muggle", but calling someone a mudblood in the harry potter universe was how literal children reading knew you were the bad guy!