It is my understanding that the term "P a k i" definitely IS offensive in the same way that "N****r" is.
It is especially offensive when it is used as a sweeping label for anyone who "looks like one" regardless of whether their ancestry does or doesn't originate in Pakistan.
AOG:
"it is just an abbreviation to a word, just as Brits, Scots, Aussies, Poles, Ruskis etc etc".
So with that in mind, would you be happy -for example- to shout out to someone in a crowd "Yoo hoo, hi, yes you - the P**i, you dropped your keys"?