I think its fine as long as you aren't making fun of retarded people directly. Big difference between saying your friend is doing something retarded vs insulting mentally handicapped directly for something they can't control. But yeah I'm an insensitive jerk or whatever mean things you want to call me I guess.
I really don't have a problem with the word itself. I understand that, like other words, it's become largely taboo. And I also understand that a certain poster on here had mad outrage on its use a while ago. Until his buddy Tempo used it, by calling someone a "fucking retard". Now, it's apparently not as big of a deal.
Sorry, I think selective outrage is bullshit, and it shows what kind of a person someone really is.