N-Word - definitely a no - go. Talk to your co-teachers in a meeting. Don't accept that as "kids being kids". Say, if they keep using it as a loosely based joke, they may grow older and say that to the wrong coloured waygook and get hurt for what they thought was a joke. and I am thinking of the military guys. Another thing is, I have a friend who told me that one of her students did a presentation using the N-Bomb, clearly not knowing what it mean. In the presentation, she said that she wanted to marry a "N-Bomb." People over here only know their own culture and don't know what is offensive. Bring enlightenment to them.
I use different coloured people in my pictures all the time. First a white person so they are reminded of English, multi cultured person next, black, latin, etc, then an asian with coloured people to show mingling and expansion. Subtle growth.
Girls in middle schools are beginning to show attraction to dark skinned people. It is very noticeable.