Racial issue

I am having a slight problem with what to do regarding a topic.
Well, my board is supposed to be 100% free speach. It says so on the
banner. So now my best poster (has more posts than me on my own board)
is saying things I ... really ... really... don't agree with. She even uses the
dreaded "n" word.

On one hand I don't want to censor anyone or anything.
On another hand, I don't want people coming to my site and thinking it's a klan meeting either.
This poster is also a mod, so it looks doubly bad.

What would you do?

First as admin I would edit the thread and replace the word with ****'s

Next I would simply email or pm this person. Let them know what you expect of them as a mod. Perhaps mention as a mod they are to lead by example and maintain the community and not feed the fires that arise on a forum at times. You may also consider adding these type of words to the banned words list in your ACP. That way if anyone uses such a word it will just be displayed as **** or what ever you wish. ;)

As a mod of your board, they should be a little more cautious as to what they post. Whatever they post reflects you. Talk to your mod and let them know your not happy with whats they have posted.

You should also think about what & how you want to run your board. Where do you want your board to be in the future?

I don't want it thought of as a racist board just because of one member.