It's a visceral term for them -- one that summarizes all of their hatred and anxiety in one, germanic-sounding, single-syllable word.

1. Hatred of minorities
2. Fear that minorities are in any way superior to them (yeah, the dick size thing)
3. Implication that helping minorities in any way is tantamount to allowing and encouraging them to have sex with your wife/girlfriend
4. Heteronormativity (everyone is or should be straight, and we'll imply that with this insult, just a bonus)
5. Miscegenation (tied in with #1)
6. Begins and ends with a "k" sound (sounds tough, allows the use of guttural sounds and dropped vocal cords -- a lot like "fuck" but with the added bonus of an extra K sound)

It really hits most of the white nationalist bases, because it rolls in the whole anti-welfare thing (allowing welfare is equivalent to literal cuckoldry). I can't think of an insult that would threaten white nationalists more, other than maybe an n-word or six-letter f-word. Even the c-word (sorry, I just refuse to actually type these word) wouldn't threaten them as much as implying they've been cuckolded.

I think it also points toward a certain latent homoeroticism in their minds, though, and fascination with black sexuality in general. They wouldn't acknowledge it, I suspect, but they're deeply aroused and fascinated by the concept, just as much as they're disgusted by it.

There were electrophysiological studies that examined male arousal in response to homoerotic imagery, looking at blood flow in men's penises. As I recall, men who professed highly negative attitudes toward the LGBT community (homophobic) had the highest average indications of arousal at homoerotic imagery. I wish I could remember who the authors were and where the work was done. It has been about 10 years since I was reading in that literature.