I mean, you’re free to think whatever you want. I explained why I don’t think it’s offensive in my game. Also, stop acting like you represent a monolith. Not everyone finds it offensive and you can find discussions all over the Internet disagreeing about whether its offensive on its own, only as a slur, or even offensive at all. This isn’t like a settled matter. It is simply not comparable to the N-word. It’s a word the vast majority of people only find offensive in a specific context.
I can empathize if it’s a word that has specifically caused you pain and harm, and I am also open, as I said, to suggestions on what words to use instead while still making it clear to potential players what kind of content I’m referring to. The spell is called Ambae in the game, so I could just call futanari characters “Ambaeans” or something, but no one would know what that was, and people who like this sort of content, as I do, wouldn’t be able to find it. Listing this content as trans or intersex also isn’t accurate, and may be even MORE problematic.
I think this is an accurate use of the term “futanari,” referring to the fictional character type that has always been called that. I do not see it as a slur, and I would never call an intersex or trans person that. So yes, in effect, “it’s fantasy, so it’s fine” is my position, and I don’t see that as absurd at all. I wouldn’t call a lesbian couple “yuri” in real life either, and even though that isn’t a slur, that’d probably be at least somewhat offensive if someone actually said that.
An even better example might be if I was using the term “fairy” to describe a fantasy creature. Maybe that word upsets some people and sure I recognize that calling someone a fairy can be a slur, but if my game has winged tiny creatures and I call them fairies, that’s obviously not a slur.