People can use the expression in context and many do. Speaking as a black guy (but not representative of all blacks), I have a visceral reaction to the word[0] so when outlets self-censor, I see it as a small sign of respect and I appreciate it. YMMV of course.

I understand the arguments that "n-word" or "horrific racial expletive deleted" is awkward or may be seen as patronizing, but I see "nigger" (in nearly all contexts) as insulating. It's a tradeoff, and from my POV not using the work is preferable. Again, YMMV.

[..] all it does it soften the racism used in that instance.

I think you're correct, it does soften the racism, but I also think it improves relations. I'm okay with that.

Just to be clear, I'm just offering my own perspective here, I'm not trying to convince anyone to self-censor. If someone wants to scream "nigger, nigger, nigger" from the rooftops, go right ahead. Just don't expect me to ever listen to you.

[0] Yes, even when other blacks use it