I seem to remember Elaine using the "M" word in the diner in an episode. The reason why I now think about this is that the whole discussion of needing to say "...not that there's anything wrong with that..." as being to avoid the censors/activists reminded me of the similar discussion about them not using the M word.
Is my memory warped, or did she use the word in another episode???
-Evan Golub-
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I don't remember Elaine saying it, but in the Episode where George and Jerry pitched the show about <Nothing> to the NBC execs, George said it. George first of all was insistent on having the show about nothing, then in the second meeting he totally reversed his opinion and said something like: "Without a plot it's just masturbation."
Maybe they thought it would be overkill to say it throughout a whole show, or more likely, they just thought it would be funnier to dance around the word.