Fortunately, I've never heard anyone use it to mock the disabled.
If I say "my brother is retarded" I'm making a statement of fact. It's a netural descriptive term, intended to communicate his sitatuion to you in the most straightforward manner possible.
Certainly, some people do use it as a replacement for an inslut like "stupid" etc. When people are using it in this manner, they're not actively trying to mock the disabled. It's obviously in poor taste and offensive, but if someone uses it, I don't get all bent out of shape about it. The language itself is irrelevant -- it's the meaning behind it that matters. At any rate, you should never outright insult someone -- it's bad manners, offensive, degrading, and in some cases abusive -- but if I hear someone call someone else a retard, I know they're not expressing a mocking disdain of the mentally disabled.
More generally, the eupheuism police concept bothers me, because as I said, I get the sense that people believe that if we somehow blacklisted certain words, we would solve the problem. I don't care if you use the word retard or not. Instead, I would prefer if you did something to help.