Censorship and TV

http://www.dailymail.co.uk/news/article-2266738/Censorship-row-BBC-cuts-racist-lines-classic-Fawlty-Towers-episode.html

Lots of people might agree with the view that racist or offensive language should be censored from TV in some cases.  However, what if the programme was made in the 1970's when that language was more culturally acceptable?  This week the BBC have edited out the N word from an episode of Fawlty Towers in case it offends people.  Lots of people have complained that his is "airbrushing history".  The character that says this word in the show is well known in the series for being old fashioned and not really "with it".  So doesn't it make sense that he might use this sort of language?  Or it is offensive no matter who says it and no matter what context it is said in?  What do you think?