Of course, there is a difference between reclaiming words and internalising one's own oppression. Example, I may call myself queer because I'm out and proud. To consider myself queer as in a Bad Thing, perverted, wrong, would be rather sad and known as internalised homophobia. And if someone else calls me queer, they usually make it damn clear it's not a compliment. Similarly, Skin from Skunk Anansie can refer to nigga-rage (in Here I Stand), because she is black and certainly does not have her own version of racism going on in her head.
The thing is, chances are that the offensive terms are never going to go away. To co-opt them as a sign of pride, while reserving the right to punch some asshole who hurls them as an insult, is pretty much all you can do.