Regarding racism and its whitewashing in the game:

I don't think it's entirely innocent of it, but I also think you're projecting more "grit" onto the setting than there is, Theodric. You're taking some morally dubious aspects and assuming other morally dubious aspects must then exist as well, when in reality, it's what's on the screen that matters. Our protagonists not being xenophobic isn't unrealistic or avoiding issues for the sake of being "PC" - it's what makes them our protagonists, especially since they're surrounded by less forward-thinking individuals. And, considering that all of the city states have a bit of an "open-minded-leaders-versus-morally-dubious-status-quo" thing going on, claiming that that's betraying the setting somehow is ignoring that it's always been the setting.

Honestly? Your worst fears have been realized from the first. Final Fantasy XIV already adheres to modern sensibilities and morality, and always has.