One of my favorite I'm-a-new-step-parent stories is from about 10 years ago, when my big kids were about 6, 4, and 2 and my little kids weren't even a twinkle in their dad's eye.
I was driving down a twisty, speedy four-lane road near Boston, all three kids strapped into carseats in the back of my Saturn, when an obnoxious guy in a black BMW cut me off on a sharp turn. I slammed on the breaks and hissed, "Ohhhhh, you F__KER!"
And, from the back seat, came the voice of the eldest, in that I-just-caught-a-grown-up-doing-something-wrong tone that all parents know too well: "Whhhhhhat did you say?"
I panicked, casting about for a plausible explaination. The only one I could come up with was: "Well, you know how Snoopy chases the Red Baron? And the Red Baron flies really fast in his airplane? That kind of airplane was called a Fokker. F-O-K-K-E-R. They used them all the time in World War I. That guy in the black car was going so fast it was like he was in an airplane."
She didn't buy it, but even then she was a graceful kind of skeptic, so she gave me the benefit of the doubt, verified the WWI aviation factoid with her dad, and didn't repeat the word herself (at least, not in my hearing). But I knew that I had used up my one Get-Out-of-Jail-Free card for cursing and I would never, ever be able to pull off an explaination like that again. Ever. So, instead, I trained myself in the fine art of alternative swearing.
Cursing in other languages is an OK substitute -- until the child says it outloud in front of a native speaker. (Really, it does happen, especially in multi-cultural families. Just ask my parents.)
My favorite alternative swear word is "Bottle Rockets." It has a satisfying bite to it, enough syllables that you can really draw it out when you stub your toe (or get cut off in traffic), and, best of all, has absolutely no bad repercussions if said regularly in front of children.
Do you swear in front of your kids? How do you deal with it when they repeat what you say?