The only time I got banned for bigoted stuff, was precisely for quoting someone’s n-word and calling them out on it. Automod didn’t care about the context, no human did either.

It sounds like the right call was made (as long as both you and the OP were banned). As a white person, there is no reason for you to use the n-word. In that situation simply changing it to “n-word” is the very least that could have been done

I’m not really sure how that provides and example of stuff going on in the background that someone wants to keep out of sight.