Is that how you justify a swastika tattoo? You can also rob the bad people of the power to hide behind the words and symbols: if only bad people use them, we know the users are bad. It's definitely signaling, I don't see why it has to be "cultural".

When the meaning of a word gets distorted by use in bad faith, it's no longer useful for its original purpose.

Switching to another word isn't ceding power to the bad people. It's taking away their power to redefine things. It's letting them have the now-useless word exclusively, which will become associated with their speech, and not the original meaning. The original meaning is reclaimed by using a new not-yet-soiled word for it, and the cycle continues.

No one ever said the average person is smart.

It only works because we're in a society of judging people the moment we see them. Mimicking the language of "bad people" will get that association. I don't think we'll ever truly "fix" that.