The problem I have with discontinuing the use of word, even when it's used improperly, is just that - its discontinuation. Retard/retarded, despite its connotations, is a real word with several meanings and whether that's the classification of the mentally handicapped or "the extent to which something is delayed or held back" or even as most people use it, "idiot: a person of subnormal intelligence", it doesn't matter - it's still a legitimate usage. I read 1984 and so it's quite clear that the restriction of word choice is the restriction of expression, and that's not something I'm for.
If you want to rail against something, rail against our society that classifies and categorizes people with labels that then acquire these connotations because of said labeling. As 'trane pointed out, words like moron, idiot, etc. used to have the same connotation as retard but gradually lost it because of disassociation or acquisition of a new meaning, much in the same way as fag/faggot if you've seen a particular South Park episode. From my perspective, the more we use retard/retarded as a synonym for idiot/idiotic, the more we'll associate it with that and not the mentally handicapped so that we can judge those people on their own merits and actual degree of retardation rather than reducing them to one word.