Not defending any kind of racism at all, but I see the paradox in being wrong for they to sing the lyrics of one of their own songs. Probably it's unfortunate, and that's why MCA doen't say that word, but maybe with the spur of the moment mike and adrock just spitted the rhymes that happened to be the last word of the verses (so it's not a word you can't hide so easily).
Again, not defending it, but I don't think this even close to a "Cosmo Kramer racist show" situation