Since the days of George Carlin and Lenny Bruce, stand-up comedy has been edgy. At best it includes a healthy measure of pushing envelopes and challenging taboos. At worst it relies too heavily on shock and offense to entertain. Watching this clip it seems to me that Michael Richards was improvising and attempting to shock people, and took a wrong turn. He ventured into the Things You Can't Say, and the audience got offended. Now he's being hamstrung in the press for this outburst, and it appears nobody is willing to attempt to understand his actions in the context of a comedy routine. Many seem to believe he got so angry that he showed his true colours, that a deep and hidden vein of hatred was exposed for all to see. I suppose that's possible but it doesn't seem likely.
I mean gimme a break, the guy grew up in Los Angeles and works in Hollywood. He's probably more comfortable with different races and cultures than most of us - maybe that's why he decided he could get away with this bit, before it got away from him.
For good measure, here's his apology from the Late Show.