IMO, words like gay/****/whatever and trash talking is just dumb. The majority of it is either good fun between friends or rivalries, or someone salty that they lost/overconfident because they won. Only rarely is it because the person playing/talking is an actual douche and just does it to demean someone else. It doesn't make it right, but there's lots of things in this world that are inherently wrong, yet done a lot between friends/communities/family members/whatever because it's all in good fun.
Concerning racism... People preach against this behavior hre and there, but if they do, they might as well preach against stereotyping children as well, or calling others old because they are "past their time", or calling them losers because they keep failing to succeed, or calling them fat because they are a few pounds heavier than you... Don't these other terms matter (as we'll as the others I've forgotten to mention), or is it just homophobia, racism and sexism used in a playful manner that matter? They are the most used, sure, but does that make them more or less important? That's how I see everything. I'm latin american, born and raised in PR, so I'll get my share of racism in life eventually. Does that mean I'll care? Hell no, I'm better than that, one (or a group of) person(s) won't make my life harder simply because they want to trash-talk in a tournament by pointing out my race and/or gender.
About the words, **** is used because it refers to something extreme that leaves the victim suffering both physically and mentally, using "decapitate", "destroy", "kill", "assault", "dismember", "******", "mug", "terminal illness", "shell-shock", or anything for that matter that might have in common with the afore-mentioned words is just as bad as saying "****", people just choose to use that word out of tradition, it's been used for as long as I can remember in any gaming community, not even fighting game communities only. It doesn't make it okay, but trying to get rid of it because you can't handle a four-letter word because it may hurt someone's feelings somewhere is just as dumb as getting rid of the word "kill". Hey, maybe someone's family member/friend was killed by someone, how insensitive!
I wanted to write something else, but I'm on my phone and that took me like half an hour to write, and I forgot what the third thing was. Oh well, I'll just drop my two cents in here now.