…may well have been because he knew that squaw was actually a slang term for cunt, or as The New York Times euphemizes, "a part of [Indian women's] anatomy in particular."
"Squaw" originated in a branch of the Algonquin language, where it meant simply "woman," but it turned into a slur on the tongues of white settlers, who used it to refer derisively to Indian women in general or a part of their anatomy in particular. The settlers liked the word so much that there are now more than 170 springs, gulches, bluffs, valleys, and gaps in [Oregon] called "squaw." All must be renamed under a 2001 law that was enacted after two members of the confederated tribes persuaded the Legislature that the word was offensive to many American Indians and should be erased from maps. But only 13 places have been renamed so far. It is a problem familiar to Indians and government officials in several states where attempts to outlaw "squaw" have been caught in a thicket of bureaucratic, historical and linguistic snares.
Whole tale–and cheap nudge-nudge headline ("Renaming 'Squaw' Sites Proves Touchy in Oregon") here.
Speaking of euphemisms in newspapers, here's a New York Observer piece that asks whatever happened "%#$*!!"? and looks at recent bowdlerizing of Berke Breathed comic strips, in which "50 blows" was replaced as a punchline with "50 spews." Whole "%#$*!!"? thing here (scroll down).
Update: In the comments below, Reason Contributing Editor Charles Oliver (who blogs at the most excellent Shouting Across the Pacific) points out that there's no proof that squaw means what The New York Times says it means. Here's a 2000 Straight Dope col on the topic, which notes, "I'm not saying it's not an insult. It's just not an obscene insult."