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This is all fine but then
This is all fine but then when you get into other terms like Latino, Chicano, Mexican-American, Mexican, South American, Latin American, and so forth you realize that they too have shortcomings and/or over generalizations. So at the end of the day you are left with a bunch of definitions of which none are perfect.
In addition, while 'Hispanic' may have meant one thing in the past, like language in general, it has evolved (especially among raza) to encompass a far more 'Latin American (including Puerto Rican)' group of people. As any linguist will tell you, the definition of terms is not what central powers give it, but how everyday users of the word define it. And in everyday usage, "Hispanic" has evolved to overcome many of the shortcomings you cite.
Finally, not only is this an insignificant battle but it is a battle you are not likely to win. Hispanic has become so embedded in everyday language that it would be very difficult, if not impossible, to stop its usage. Unless you get every Hispanic to take a Chicano (a term, btw, not lacking in its own problems) Studies course - and most have enough sense not to waste their time - you are not likely to motivate anybody enough to work hard against its usage - leaving the word to be defined by the masses instead of leading to its elimination.
Which brings me to an alternative approach. If the definition of Hispanic pisses you off so much, instead of trying to eliminate its usage, why not try to focus its usage on what it means to the everyday person? This has been my approach. Instead of giving up the term to the anglo government census, I have used the term to mean precisely what many take it to mean - a person of Latin American descent. So as a first generation Mexican-American, I wear the term proudly and everybody who sees what I look like will have a much more refined definition of the term.
So happy Hispanic Heritage Month Liza. ;-)