Moving back in with my family in Colorado, I find myself in a house full of my teenaged brothers and their teenaged friends. They have a certain way of communicating with eachother that typically involves generous use of the term "faggot", in the same manner as you describe here. It's like it's not really meant as an insult, but instead used for its "comedic" value even though it's inherently condescending.
One of my brothers' friends, over the course of conversation, let that word slip my way a couple of times. (for example, he saw me putting on my shoes and coat to go outside and smoke a cigarette, and it's "Where you going, faggot?")
Now I let it slip the first or second time, laughing it off. (choosing option 7 on your list) But it kept happening, and I knew that if I didn't set things straight, that's how the relationship between me and this kid would develop. So the next time he did it, in front of all my brothers and their friends who were scattered around the living room and kitchen playing video games, I calmly but firmly said "I don't appreciate it when you call me that. I know you're just joking and you're not really meaning it as an insult, but it's disrespectful. Please don't use that word with me anymore." in a dead-serious tone, where everyone could hear. He immediately got an embarrased/nervous look on his face and apologized under his breath. I told him it was alright, I just don't want him using that word anymore with me. And I thanked him. There was generally no reaction from everyone around, just a processing of what was happening.
Since then I've gotten to know him a little bit better, and we get along on good terms. I just knew that I had to stop that behavior right when it started or else the relationship would develop in an unhealthy way.
In other words, I think the balanced response would not be to make a huge deal about it, but just politely request that they respect you in a firm and serious tone, leaving no doubts that that kind of behavior is not accepted by you, and won't be reinforced or allowed in any sort of way, period.
And then if they redirect their disrespect into other avenues, you've got a whole new catalyst to work with. :p
One of my brothers' friends, over the course of conversation, let that word slip my way a couple of times. (for example, he saw me putting on my shoes and coat to go outside and smoke a cigarette, and it's "Where you going, faggot?")
Now I let it slip the first or second time, laughing it off. (choosing option 7 on your list) But it kept happening, and I knew that if I didn't set things straight, that's how the relationship between me and this kid would develop. So the next time he did it, in front of all my brothers and their friends who were scattered around the living room and kitchen playing video games, I calmly but firmly said "I don't appreciate it when you call me that. I know you're just joking and you're not really meaning it as an insult, but it's disrespectful. Please don't use that word with me anymore." in a dead-serious tone, where everyone could hear. He immediately got an embarrased/nervous look on his face and apologized under his breath. I told him it was alright, I just don't want him using that word anymore with me. And I thanked him. There was generally no reaction from everyone around, just a processing of what was happening.
Since then I've gotten to know him a little bit better, and we get along on good terms. I just knew that I had to stop that behavior right when it started or else the relationship would develop in an unhealthy way.
In other words, I think the balanced response would not be to make a huge deal about it, but just politely request that they respect you in a firm and serious tone, leaving no doubts that that kind of behavior is not accepted by you, and won't be reinforced or allowed in any sort of way, period.
And then if they redirect their disrespect into other avenues, you've got a whole new catalyst to work with. :p