He's 'high functioning' in the sense that he can produce elaborate computer software that runs fast, in other words he has impressive engineering skills. Socially he's pretty incapable. I think his offensive racist, homophobic and other offensive remarks are part and parcel of his condition because I've spent quite a lot of time reading his rants, and disagree with your claim that his use of slurs is not random and generic. It's not uncommon for him to claim that 'bill gAtes is an atheist nigger' and talk about hod God likes 'African musical rhythms and does not like white people so much' on the same day.
Yes, he does seem to use the epithet 'nigger' more than all other epithets combined, which is understandably alienating for many people. But I don't think this is ideologically rooted because it is so randomly and inconsistently applied in his writing (where it makes up a small fraction of the overall output, rather than the 99% you suggest).
Being an atheist, his output of random passages from the Bible is neither admirable nor otherwise to me - it's just statistically the most likely religious text for an American with a religious fixation to be fixated on. I've met mentally ill Asian Buddhists whose cognitive patterns are quite similar to Terry's even though the cultural referents are completely different. Extreme religiosity is very strongly correlated with some kinds of mental illness and I don't find it strange that Terry is fixated on Old Testament Bible stories where God puts in a lot of personal appearances. I could just as easily imagine him being obsessed with the Koran or some other religious text that's ubiquitous in some other part of the world.
I can't agree that he's an extremist - his (inoffensive)
'Guidelines for talking to God' [1]are pretty bland and heretodox as he eschews questions of salvation, morality etc., in favor of keeping God company (which makes sense since God is apparently a fixture in Terry's life). According to Terry, God dislikes classical music, Shakespeare, French people, and Terry's drumming while exhibiting an inordinate fondness for elephants, bears, and 1960s pop singers. You could work these elements into some sort of coherent ideological position just as you could characterize his relentless automated Biblical quotation as Christian extremism, but I don't think either position makes sense.
What's remarkable about him is not the endless stream of nonsense, much of which is offensive when it's even coherent; it's the fact that he manages to construct working things as part of his intellectual pursuits and carry on some kind of social life despite his mental circumstances.
1. http://www.templeos.org/Wb/Adam/God/HSNotes.html#l1