It seems to me that he made a flimsy back story
All back-stories are flimsy, and it is allowed to play a despicable character.
The real question is whether or not it is an IC device or crosses the line into OOC attitudes. If it refers to IC events and IC characters and is part of the game, there shouldn't be any issues. But the BM world is not like the actual medieval world was, and prejudice which is not founded in BM do not need to encroach in the game.
Some time ago there was a similar thread which you may like to read:
http://forum.battlemaster.org/index.php/topic,4346.0.htmlAlso:
The golden rule is this:
If someone contacts you and informs you that something did or said offended them, then politely apologize and modify your behavior accordingly. We're all friends here, and friends respect each other's sensibilities even if they're not shared.