the euphemism treadmill is a description of linguistic patterns, not a get out of rule free card
Using ableist language as insults is always bad, even if the words seem innocuous. Some may reference the "euphemism treadmill" to try to justify their behavior, but it's crucial to understand that the treadmill is merely a linguistic observation. It does not exist to normalize ableist behavior.
I have an older family member who is severely mentally disabled and always has been. His medical records diagnosed him as r*tarded. The adults diagnosing him at the time didn't understand enough about mental conditions and their differences when he was a child. So kids like him were diagnosed with that. It did have more 'legitimate' uses than it does in our current context. Doesn't make it good or right, doesn't mean they shouldn't have tried to be more specific either. That legacy leads to now where we have the nuance and resources to do better. I am glad it's more and more relagated to the past as it's consistently been used to dehumanize people.
The euphemism treadmill rather implies we simply load all the meaning and intention on a new word when the old one becomes unacceptable.
But that clearly isn't the case with this series of words. Many of these words have clearly different meanings and different social stigmas, and some are in use at the same time.
I mean I'd say the asterisk is overdoing it, and that this is mostly because retard isn't used as a medical diagnosis anymore. If it does ever really die expect special needs or another such word to take its place.
Oftentimes people ask me why I bother using the asterisk at all. And the answer isn’t to pay respect to those who have been othered for their entire lives by this language, or to minimize the chance of a ban from heavyhanded mods. It’s actually to make you upset, specifically.