Stereotypes - Is Punch-out Racist?

I don't know a great deal about Gaijin Goombah, only that he is a Game Analyst on Youtube, and I haven't really seen much of their channel, so in terms of credibility I'm not sure how much standing this has. However a friend pointed out this video as a point of discussion regarding stereotypes - which I didn't wholly go into explore back when. However, I couldn't honestly give you a better example of a game with such glaring stereotypes as Punch-out!!, to the point that it has been called out for being racist. 

Interestingly, Gaijin Goombah challenges this and raises some very good questions about the extent Punch-out!! goes to in creating stereotypes. 

Gaijin does rightly point out the negativity in the stereotypes reflected in the original versions of the game, such as the Russian character known as 'Vodka Drunkenski', which was changed to 'Soda Popinski'. And the other mentioned is Pizza Pasta - an Italian character who was actually removed altogether. Basically the stereotypes in the original games were entirely negative, which obviously points somewhere in the region of being racist. 

However what I honed in on was his analysis of the Wii remake of Punch-Out!!. The discussion here actually makes you stop and think that perhaps it was racism, but more ignorance and insensitivity, because in the remake things were a lot different. The stereotypes of the characters were used to add personality, but in a good way. Gaijin demonstrates this in the reactions various characters of the remake incited in the Let's Players, Game Grumps. This essentially constitutes positive reinforcement of stereotypes, as long as the stereotype helps to promote the character as something or someone enjoyable to see rather than portraying them as inferior. 

In the Wii version, these characters are almost parodies of their own cultures, which is not a racist move in any way. In fact, this approach can make stereotypes fun and, ultimately, acceptable. Bottom line: stereotype and racism ARE NOT the same thing whatsoever.


So, how else can stereotypes positively add to a game experience? Especially in scenarios like Punch-out, wherein the opposing characters are actually the most characterized and most focused upon (note that little Mac is far more generic comparatively and is also translucent to allow the player to concentrated on the opponent before them).