Some parts of this incident are troubling to me and while I don't know enough history here, it bothers me when it comes to the chilling impact on the discussion of ideas. 

For example, what was the intent of the teacher?  It seems as if the intent was to discuss the evolution and changes regarding the meaning of a racial epithet.  And to me, I ask, what is wrong with that.  For example, the word "Gay" could have been used in the same discussion.  Though, I do see the difference in the use of the derivative of the word in Shakur's quote compared to the word used in the question.

At the end of the day, I guess a high school English class is not mature enough to discuss deep ideas without taking offense and maybe these discussions are best left in a college course classroom.  And I guess it may have been a good idea to run this past the Black principal.  Still, resistance to challenge young minds is troubling to me (that is unless I am missing something).

Still, for the one relative to automatically attribute "racism" from stories she had heard is just one thing that prevents race from being discussed in the open. 

With all of this, though, about a year and a half ago a woman I know shared this five-minute video of Ta-Nehisi Coates on the trouble White people have with understanding why we Whites think all language belongs to us.  Not only that, to me, this video really shows a perspective on Whiteness that is actually appropriate to all parts of American society and not just words.  For me, this video has been one of the most important, mind-opening videos I have ever seen.  It really did have an impact on my thinking and in a good way.