I thought everyone in this game was Avalonian (OK, the Azrillis are from another continent, but does that affect any players) - how can Babidi be being racist? The worst he could be is \"city\"ist, but we're all guilty of that.
If you're referring to race in some other world:
a) How wouuld anyone know what your race was
b) How would you know what anyone elses race was
c) How would you know what their other world feeling were
As for this ww1&2 you speak of - I suspect these Americans were meerely small time players, arriving late when the outcome was already decided.
Written by my hand on the 1st of Midwinter, in the year 1043.