"Honky"

This guy I work with got sent to cover a shooting and when he was trying to interview the dead guy's survivors, they got really upset and some guy called my co-worker a "mother-fucking honky."

I didn't even know people still used that word as an insult. I'm not sure if that means that I CANNOT just start calling people "honky" instead of, say, "dude," or if I SHOULD start using it to show that I'm "owning" the word and that therefore it can't be used to insult me.
I also thought it was funny because it's just so obvious. I mean, this guy is so white, he's clear, for crying out loud.