I try to be particularly sensitive on this subject, as my wife works in the local county Mental Health/Mental Retardation offices, and is active as an advocate for proper terminology and the removal of social stigma.
I've checked with her, and she is quite clear that the term "retarded" is outdated, is considered offensive/demeaning by many, and is, in general, unacceptable for use.
In fact, government MR offices (MR stands for Mental Retardation) are in the process of changing their names to Developmental Disabilities, which is the new accepted terminology. That the offices are currently changing their names indicates that this has been a fairly long time in the works (bureaucratic changes does not come quickly).
I have edited the question referenced, and I think the part that I left is a clear indication that the OP's daughter is a bright child, which hopefully preserves the original intent without using terminology some may find offensive.
Moving forward, I believe that it is in the best interest of the site to make an effort to use terminology that is generally accepted as not being offensive. This is potentially an educational issue, rather than a "be nice" issue, as I do not believe people using such terminologies are necessarily seeking to be offensive (I certainly did not feel that was the intent of the OP of the referenced question), so I would ask that anyone coming across such an issue of terms politely correct it, with an explanation in the edit reason, and, if necessary, a reference to this meta question should further questions or concerns arise. If it seems that the issue is escalating, or someone has been offended, please do not hesitate to flag a moderator.