I can't speak about small town Alabama but in big town Georgia the ONLY time I have heard that word in the last 30 years was from a guy I used to work for. He was from New York.
Racism is not geographically restricted to anywhere. I am always quick to point out that the South has exercised many of it's racial demons. Howard Beach, anyone?
I live in the big Georgia town now, too. I don't ever hear that word either. I also don't hang around any flag displayers anymore either. Do I think there is a connection? Well, yes.
I live in the Atl & to hear the 'N' word a hundred times in 3 hours just go to the Georgia Dome on any Sunday the Falcons are in town. Difference is; it's the blacks using the word in every sentence. Maybe it's a southern black thing?