It may have been inoffensive once, but... it's really more in how it's used. People don't use "mongoloid" affectionately, they use it as a slur. Or as a way to objectify a person- "that mongoloid kid", something along those lines. The only people I've ever heard using the term were being offensive. It's like people who say "tard" to refer to someone who's mentally retarded.
If you used it in front of a friend or family member of someone who has Downs Syndrome, you'd either be politely educated, or slugged, depending on whether they thought you were being intentionally rude.
You know it's sometimes hard to keep up with what words are 'in' and what words are 'out'. Instead of jumping on Martin wouldn't it be better to assume he didn't know he was using an 'out' word? You could have explained it in your first post rather than getting angry. While you're at it, do you know why the word oriental is out and asian is in?