Two Problems here. One is "euphemism" for "black." A euphemism is a substitute word for something offensive. Perhaps you meant a euphemism for the N-word.

Two: The indication that the usage is confined to "southern racists" is contradicted by the citation of the (midwestern) Kansas City users.

As someone who's lived in the North, the South, and the Midwest, I find racism to be equally prevalent. All the snide, smug, ignorant, anti-southerner bigotry by self-professed open-minded always seems to get a pass, though.