Utterly ridiculous. This isn't "the right crowd". I'm sure there are places in the world that I could get away with having a Swastika tattoo, for example. But it's been made pretty clear that referring to such things here is not okay. "Playing the game with friends" does not mean you can say the same sort of thing to anyone in the game that you would to your friends and think it's alright. My friends and I call each other dickhead and !@#$wit all the time and we know it's just a joke. Calling people those names in game, IC or OOC, would not be alright, and using phrases with racial overtones is even worse.
Then be IC racist against IC races/nationalities. Call them D'Haran scum or Arcaean sheep-!@#$ers. Do not be racist about RL races.
Good points, but two things I disagree with:
-Calling each other names (as in other players) is not the same thing as a character thinking ill of an NPC based on appearance and expressing that opinion. Did the player direct this at any character in particular? To another player? No. People taking offense to this would be sympathising with a three word NPC character that won't even exist long enough to see the sun go down.
-D'Haran or Arcaean aren't races. Even in BM we would expect people to be causasian, asian, african, ... In real life racism isn't fair because you can't change the colour of your skin, but in BM you can do just that. As long as we, as a community, assure not one single race is being targetted consistently, I can't see a problem with IC racism.
We can hate on in-game nationalities and religious beliefs, why not races? When a character of mine attacks a Triunist for being polytheistic will the Buddhist playerbase take offense?
Note: I detest racism in real life and have often fought and argued against it. But pretending it doesn't exist won't do any good for anybody. So bring on the hate against those wide-eyed white people, because they're fat and lazy too!
Note 2: I wouldn't use racial comments myself, in BM or anywhere else, because I consider them wrong IR and tasteless in BM. But that doesn't mean I think it should be prohibited. BM needs evil characters as well, and they're not supposed to be likeable.
Did I manage to bring my point across, at least somewhat?
Edit: a word.