Marina Warner, in her book Managing Monsters: Six Myths of Our Time (essentially her 1994 Reith Lectures in book form), has a note on the practice of reclaiming slurs and insults, often called reappropriation:
Moving in to occupy the metaphorical objects of derision and fear has become a popular strategy. Sometimes this takes the form of ironical co-opting of a jibe, or even an insult – as in the open defiance of the black rock group called Niggers With Attitude, or the ironic names of women’s enterprises, like the famous publishers, Virago. In Zagreb, five writers were recently denounced as dangerous women in the Croatian nationalist press: the targets immediately accepted the label, and their supporters now wear badges proclaiming them ‘Opasna Žena’ – a dangerous woman. This is a form of well proven magic, uttering a curse in order to undo or claim its power, pronouncing a name in order to command its field of meaning.
I like Warner’s description of this act as occupying metaphorical objects, like sleight of semantics: it captures the tangle of abstraction we employ in constructing identity, while also prefiguring the global use of occupy in political uprisings and protests in recent years.
The case of virago is interesting. Jane Mills, in Womanwords, says the word is used ‘to designate a noisy, domineering woman, often used opprobriously of hated female stereotypes like the mother-in-law’; she notes that the publishing house adopted it ‘not without a little irony’. (By coincidence the book I’m reading today was published by Virago: Marilee Strong’s excellent A Bright Red Scream: Self-Mutilation and the Language of Pain.)
The Wikipedia page on reappropriation is patchy but has a decent list of examples. One case not included is when in 2013 the Turkish prime minister called protesters çapulcu (‘looters’), and they quickly adopted the epithet with pride; the novel verb form çapuling became a popular rallying cry. The use of reclaimed slurs is not without hazard, though, even for lexicographers, as Kory Stamper showed in a thoughtful post.