I actually think it's politer and more agreeable to use the asterisk. It's akin to presenting a photo of a bare-chest woman with the nipples striked-out with a black line. Everybody knows what is there, but it makes the picture a lot more agreeable and less obscene.
If you know what the word is, an asterisk doesn't hide anything. If you don't (what are you, 3?), there's nothing to hide.
I don't think nudity is obscene either, but I can see why people might want to remain private. Just because I know what a nipple looks like doesn't mean I know what YOUR nipple looks like.
And of course, to a large segment of the population striking out bare breasts makes the picture a lot less agreeable.
Personally, I find the nipple thing pretty inane as well. I have no idea how anyone benefits from covering them up, especially when it gets to a point where the nipple is the only part of the breast covered.
I don't really see how its particularly less "obscene", nor how someone who would normally find the picture disagreeable would suddenly find acceptance because of a token gesture censoring a small portion of the photo.
If you're going to use a word, use it. If not, don't. Fuck.