Good to know the official version. I remember it being used to distinguish between "them" and "us". As I stated, this was my opinion.
Well technically it's not the official version just the wiki version, but it does point out what happens sometimes between actual Doctrine and how that docrtine is applied by some.
I would say your assessment is accurate in descirbing what happens culturally among some Mormons. The Bible uses gentile in different contexts. Unfortunately some Mormons culturally have used gentile as an "us and them" distinction. I had a mission companion who used it this way. However, the Doctrinal meaning and Cultural use isn't always the same.
The same thing happened (different Doctrinal and Culutral usages) in the late 1800's and early 1900's when some mormons started to adopt the Protestant idea that the great and abominable church in the scriptures refered to the Catholic Church. This was expressly repudiated as a false Doctrine by LDS Church authorities but some mormons culturally continued to use it this way even though it was not supported Doctrinally by our canonized scritpures.
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GUIDE TO THE SCRIPTURES
Gentiles
As used in the scriptures, Gentiles has several meanings. Sometimes it designates people of non-Israelite lineage, sometimes people of non-Jewish lineage, and sometimes nations that are without the gospel, even though there may be some Israelite blood among the people. This latter usage is especially characteristic of the word as used in the Book of Mormon and Doctrine and Covenants. Israelites were not to marry non-Israelites (Gentiles), Deut. 7: 1-3. The Lord would come to be a light of the Gentiles, Isa. 42: 6. Peter was commanded to take the gospel to the Gentiles, Acts 10: 9-48. God also granted repentance to the Gentiles, Acts 11: 18. We are baptized into one church, whether we be Jews or Gentiles, 1 Cor. 12: 13. The Gentiles should be fellowheirs in Christ by the gospel, Eph. 3: 6. The Book of Mormon was written to the Gentiles, Title page of the Book of Mormon (Morm. 3: 17). A man among the Gentiles went forth upon the waters, 1 Ne. 13: 12. Other books came from the Gentiles, 1 Ne. 13: 39. The fulness of the gospel shall come to the Gentiles, 1 Ne. 15: 13 (3 Ne. 16: 7; D&C 20: 9). This land shall be a land of liberty to the Gentiles, 2 Ne. 10: 11. The Gentiles are a likeness of a wild olive tree, Jacob 5. The gospel is to come forth in the times of the Gentiles, D&C 45: 28 (D&C 19: 27). The word will go forth unto the ends of the earth, unto the Gentiles first, and then unto the Jews, D&C 90: 8-10. The Seventy are to be special witnesses to the Gentiles, D&C 107: 25. Send forth the elders of my church to call upon all nations, first upon the Gentiles, and then upon the Jews, D&C 133: 8.
BIBLE DICTIONARY
Gentile
The word Gentiles means the nations, and eventually came to be used to mean all those not of the house of Israel. It is first used in Genesis with reference to the descendants of Japheth (Gen. 10: 2-5). As used throughout the scriptures it has a dual meaning, sometimes to designate peoples of non-Israelite lineage, and other times to designate nations that are without the gospel, even though there may be some Israelite blood therein. This latter usage is especially characteristic of the word as used in the Book of Mormon.
The duties of Israelites toward gentiles were defined in the law (Ex. 23: 32; Ex. 34: 12-16; Deut. 7: 1-3; Deut. 20: 10-18; Deut. 23: 3-8; Ezra 9: 2-15; Ezra 10: 1-18; Neh. 13: 1-3, 23-31). These regulations served to emphasize the distinction between Israel and gentile. However, there were numerous provisions showing that Israel was to deal justly and honestly with non-Israelites and to be compassionate toward them (Ex. 22: 21; Ex. 23: 9; Lev. 19: 10, 33-34; Lev. 24: 22).
The pious Jews of New Testament times held themselves aloof from contact with the gentiles. When a gentile was converted to Judaism, he was called a proselyte. Even in the Church there was a cultural and doctrinal struggle among many Jewish Christians before they would permit one of gentile lineage to enjoy full fellowship. The first gentiles to come into the New Testament Church were those who had already become proselytes to Judaism.
Cornelius (Acts 10 - 11) was the first gentile of whom we have record who came into the Christian Church without first being a proselyte to Judaism. He was introduced to the gospel of Jesus Christ through a series of divine manifestations both to him and to Peter.
Paul was called the “apostle of the Gentiles” (Rom. 11: 13), and it was primarily through his ministry that the gospel was established among those of gentile lineage throughout Europe and Asia Minor, although the way was opened by Peter’s baptism of Cornelius.