Incidentally I think your post suggests the root of this matter. The larger problem is that individuals are taught at an early age that this form of language is acceptable. Using "faggot" under the connotation you describe, as one of frustration, is what I would consider normative language behavior for a certain set of speakers: American males. I'd say there's some truth to this, considering how young boys communicate with one another. Part of what they learn as speakers is that slurs have a functional importance, which is to express some particular emotion. Studies even show that swear words are as much as a reflexive behavior as the patellar reflex. They learn unconsciously that these words connote strong emotion, and suggest frustration, anger, etc.
But part of growing as an individual is understanding and being critical of your own behaviors. When we look at a word like "faggot" - we must consider not only the context of its use, but also its literal meaning. Well, its literal meaning is one that has shifted over years of this kind of behavior I'm talking about . The origins of faggot as a slur, are not entirely known (some linguists posit that it's related to the "fag" which indicates a younger term boy in British schools, but that does not explicate why "faggot" is not extensively used as a slur in the UK; incidentally the shifting of meaning of "gay" is also unknown). But as the word has been used, there's been a remarkable shift in connotative and denotative use. We know that it modern standard American English it means exclusively: slur for a male homosexual. There's little debating that - words shift in meaning as one of the many patterns and facets of language. We can also consider the larger context of 20th century social movements, and the more public face of homosexuals in the US in the last few decades. As social changes occur, so also do linguistic changes.
Therefore, there's really little credibility to these sorts of arguments. Speakers know what they are saying when they say faggot - they understand the literal meaning. They must surely know, that words are regulated not solely by their contexts. There has been a shift in the word "faggot" - which is the one we all understand it to be. Whether there's some greater shift, suggesting that "faggot" can denote something undesirable, well I would argue that reflects a greater marginalization of homosexuals via linguistic apparatus. Proponents of such views are being willfully ignorant. Frankly there's no evidence that would suggest that "faggot" is undergoing a change in meaning, rather, the case seems to be that it's becoming an increasingly powerful tool of hatred and repression.
