Far more insensitive than the word 'retard' is its abbreviated version, 're-re', used to refer to the mentally disabled. I think this might be one of those locationally determined phrases: many folk seem never to have heard the term, but West Suburban Chicagoland residents certainly have.
Calling a retarded person 're-re' or 'a re-re' is going way beyond calling them a retard, in my opinion.
I once heard my step-aunt say, "I don't like that joke; I find re-re humor incredibly offensive."
Amazingly, she didn't seem to realize that by categorizing the joke as 're-re' with a straight face and serious tone, she was being just as offensive.