Well when anyone sees ****, they know it is a swear word. So it is almost as inappropriate to have a swear filtered out with *s as it is to have it displayed. Whereas when a word is edited, it isn't always as obvious.

Actually, I think the best alternative would be to just not show anything, like just delete the word. To use Freelances example as an example, "I can't handle this ****". If the word was totally removed, "I can't handle this " still has the exact same meaning, but without the inappropriateness.