My Fiancée and me always believed that kids will learn these things (along with new fangled insults that confuse the bejesus out of me sometimes) but we always stuck to a set of rules about this kinda stuff - basically, they can use it so long as they -
1 - know the meaning of the insult, and their not just throwing it around as a "bad word"
2 - use it in the correct context (funny story a little bit later)
3 - don't just pointlessly throw the words into any conversation because its "funny" - which is just teaching them the "when" and "where" to use them.
Which as a result means they barely use insults out of context at all . . . but when they do . . . oh boy are you in trouble!
One example of this was a fight between the two eldest kids (older sister aged 3 at the time, and younger brother aged 2 at the time - this being before our youngest came along) - which resulted in the younger coming downstairs in a strop, my fiancée asked what was wrong - and the reply was that he was "Pissed off" because the older sister was "playing with his cars" which was completely in context - after bouts of laughter from my fiancée the little problem was sorted, but its still funny today. XD
Another example of this would be my Fiancée's sisters kid, while she was driving home one time with a friend and the kid. The car they where driving in was overcut by an idiot, and instead of yelling the usual insults associated with road-bound idiots at the over-taker, they instead proclaimed "You . . . stupid man!" (due to the small child in the back) and then moments later, the kid proclaimed "WANKER!" as loud as possible. My Fiancée's sister turned to her kid and explained once she knew what the word meant, she could use it - and was met with a flurry of replies consisting of what a wanker is, does - and the concept of wanking!
The last story (although not based around insults - just a little gold nugget) is between the current youngest (9 weeks old) and the previous youngest (7 years old) - when the youngest was born, the previous one openly proclaimed she was "Middle aged!" because she is now the middle child of the family . . . I couldn't stop myself laughing at it, when asked now - she'll still reply that she must be middle aged as she is the middle child of the family! XD
-- WARNINK -- LINK BELOW IZ KNOWN TO CAUZE HEMMORAGE --
I WARNED YOU, DIDN'T I WARN YOU?! BLAME RAYHAWK DAMNIT.