You might want to add (1.5) also evaluate whether what's going on is that some group of people wants to be referred to differently, and then (2') generally don't resist in that case even if no harm is apparent, because (a) maybe there's harm you haven't noticed and (b) giving people what they want is usually good. I'd certainly be on board with that. (I suspect Scott would too.)

I think this is pretty much my argument. I think Scott wouldn't agree because he wrote:

On the other hand, the people who want to be the first person in a new cascade, like USC’s social work department, are contemptible. And the people who join when it’s only reached 1% or 5%, out of enthusiastic conformity or pre-emptive fear, are pathetic.

(none of this applies to things being done for good reasons - banning actually harmful things - I’m just skeptical that this process gets used for that very often)

The roots of "Black" go back further than 1966. For example, here are two excerpts from Martin Luther King's "I Have a Dream" speech in 1963 (emphasis mine):

When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men — yes, Black men as well as white men — would be guaranteed the unalienable rights of life, liberty and the pursuit of happiness.

And when this happens, and when we allow freedom ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God's children, Black men and white men, Jews and Gentiles, Protestants and Catholics, will be able to join hands and sing in the words of the old Negro spiritual: Free at last. Free at last. Thank God almighty, we are free at last.

The relevant question, if you ask me, is which word was used racistly less often. My guess is "Black". That's what I mean when I say words become taboo because they are used offensively; they become associated with, e.g., racism.

"Black" also had the virtue of being a label of endogenous origin. Per point (4) in the OP.

Are these two reasons (being used racistly less often and endogenous origin) good enough reasons to change the word we use for this group of people? Yes, I argue. The benefits greatly outweigh the costs. 

Per point (1) in the OP, the costs of changing are low. Per point (2), the cost of changing the words we use is a cost we willingly incur all the time, for much less good reasons. Per point (3), it's not a cost we'll have to incur very often, as endogenous group labels seem to have incredible longevity. 

I hope you find this argument addresses the relevant points and doesn't skirt any important issues. I tried my best to address the crux of the matter head on while being as concise as possible.

I think this is the crux of the matter:

Was the process in this case a bad thing overall, as we should probably expect on Scott's model? (Bad: risk of mis-classifying people as racist whose only sin was not to adjust their language quickly enough; inconvenience during the transition; awkwardness after the transition of reading material written before it. Good: morale-boosting effects on black people of feeling that they were using a term of their own choosing and taking more control of their own destiny; if SC/KT was correct about "negro" bringing along unwanted associations etc., then some degree of escape from those associations.)

My contention is that changing the words we use for minority groups is not a bad thing overall because the costs are low and the benefits are high. This is what the OP attempted to establish with points (1) through (4). 

(I elaborated more in a separate comment.)

I commented on Scott’s blog post with a link to this post.

The post makes the claim hyperstitious cascades are bad, where previously innocent words that noone took offense to become taboo

A major claim I’m making is that this has never actually happened in history, and certainly not in any of the examples Scott uses. Words become taboo because they are used offensively.

Out of the two options, this is closer to my view:

"this is completely and horribly incorrect in approach and model"

I think Scott’s model of how changes in the words we use for minority groups happen is just factually inaccurate and unrealistic. Changes are generally slow, gradual, long-lasting, and are primarily advocated for in good faith by conscientious members of the minority group in question.

My contention is that this model of the process is basically just wrong for the examples of minority group labels that have actually caught on.