It should be fine if it happens IC with no real ill will behind it, only representing the character's low opinion of a particular ethnic group.
I think that this is clearly
not the case here. There is no rp context whatsoever for the statement, no IC ethnic group with narrow eyes and yellow skin for Kas the character to hate. The racism seems to be randomly lifted from RL stereotypes and placed entirely without context into the game. If one wants to insult those evil and misshapen Toprakians then there is an argument to be made to allow IC medieval racism (though personally I think it best to be cautious anyway). But this is not the case here, and even if this is some kind of attempt to create "atmosphere" by introducing medieval racism then we should make it very clear that randomly inserting RL ethnicities and racist slurs word for word into the game with no IC or RP context whatsoever is not the correct way to go about it.
