Our domain registration services are provided under the auspices of a third-party company, Public Domain Registry. They are required by the various top-level domain registries and ICANN to impose various conditions on registration.
Public Domain Registry also resells web hosting and other services using a product they call "OrderBox." We are not resellers of the "OrderBox" services. They have a laundry list of terms and conditions for the use of those services that can be found in "Appendix A" of their Registrar-Registrant agreement, which you must agree to in order to register domain names through us.
Unlike our own Terms and Conditions of Service, theirs are fairly typical for the hosting industry, including a variety of prohibitions against controversial behavior that are highly inconsistent with our own. The contents of their "Appendix A" do not apply to your use of our hosting services.
The enforceability of their agreement is strictly limited to your use of their domain registration service. "Appendix A" applies to your use of their hosting (or other) services. Since you are using our hosting services, not theirs, its prohibitions are irrelevant to you and are superceded by our own Terms and Conditions of Service. Public Domain Registry has no authority or ability to interfere with your NearlyFreeSpeech.NET hosting services. No matter what you do, their sole remedy would be refusal to process your domain registration.*
To look at it another way, since we do not provide those services, you are not allowed to use their "OrderBox Services" at all, so the question of how you may use them is moot. It's unfortunate that they have chosen this "everything and the kitchen sink" approach to their agreement, but they did.
If you register a domain with an offensive or controversial component, you are at a certain level of risk of having your domain cancelled, but not from Public Domain Registry. Each top-level domain registry has different rules for what domain names they will allow, and no matter what registrar you choose, you will always be subject to those rules.
If this is a concern to you, do not register a domain name (anywhere) containing an offensive or controversial component.
*Should a circumstance ever arise where Public Domain Registry refuses to process a registration that is otherwise acceptable to the governing top-level domain registry, we will make sure you receive at least a pro-rated refund for any time remaining on that registration, and we will provide as much assistance as we can to help you secure the registration through another registrar. This has never happened, and we have no reason to suspect it ever will.