[Nathan]

This has always turned into a heated argument in my experience.

I lived in Japan for two years in the Kansai area. The Japanese were freely using the word "gaijin" in a non-offensive manner, and the only gaijin who took offense were the ones who didn't get along in Japan in the first place. (IE the ones who refused to conform, pretended they were still living in America/Canada/England etc).

I had plenty of Japanese friends tell me they didn't like the strong anti-Chinese attitudes of their grandparents, but never did they have a problem with the word gaijin itself.

Personally I think your girlfriend is being excessively PC.