"Racism" is just the politically correct buzzword du jour. I don't think there's any real evidence of racism on Ulfric's part. It's a transposition of a 21st century malaise.
Human beings are genetically programed to trust family first, clan second...and so forth, with diminishing trust as more complex and diverse hierarchies develop.
In feudal or relatively non-diverse societies, trust doesn't come easy for those who appear different and may not ever come for those who do not share a common culture. If only because "racism" is at least one-third part cultural conflict.
Because "trust" is the issue...the real issue. And Trust Must be Earned.
I suspect that when you really look closely...and objectively...Ulfric is revealed as being almost indifferent to race. But he doesn't trust people who have not proven themselves.
Ulfric has a political objective--to dissolve the unholy alliance between the Thalmor and the putative government of Skyrim. And that's not so hard to understand.
Thanks for posting this. I'm getting tired of all the sissies whining about "racism", so this is a breath of fresh air.
I read the Amulet of Kings recently, and paraphrasing, it went something like this:
The Ayelids (elves) preyed without mercy upon the young races of men, slaughtering or enslaving them at their whim (with the help of armies of summoned daedra and dead spirits). Akatosh took pity on the plight of men and intervened by sealing the Gates of Oblivion, cutting off the supply of daedra to the Ayelids.
In the Great War, it points out that, "all manner of atrocities carried out on the innocent populace [in the Imperial City] by the elves".
I can't recall the source, but I also read that the Snow Elves declared war on mankind due to intolerance (they were alarmed at the rate at which man was breeding) and were initially successful. Then Ysgramor and the 500 Companions showed up and turned it around. The Snow Elves then scurried away underground and met the Dwemer, who treated the former so badly they became the Falmer. In the Summerset Isles, the Thalmor were a small faction, tolerated by the Altmer. The Altmer could have wiped them out, but they didn't. How did the Thalmor repay the Altmer? By taking control of the Isles, during the Oblivion Crisis. This is how elves treat each other? It seems to me that there's plenty of evidence to suggest that the elves aren't exactly innocent and don't even treat each other very well. Yet some people don't pay much attention to it, preferring to call the Nords racist. If two races behave just as badly as each other but you only criticise one of them, I would say that makes YOU racist.
Also, in the Great War, it states that the Thalmor took over the Summerset Isles and Valenwood, and had 70 years to consolidate their position. Meanwhile the Empire did nothing. When the two moons disappeared and then reappeared, the Thalmor took credit, gaining the respect of Elsweyr. Again, the Empire did nothing to restore its influence with the Khajiit. In this way the Empire gives up a chunk of its territory without a fight and alienates the Khajiit, Argonians, Bosmer and the Altmer. The Empire only fought back when the Thalmor tried to take Hammerfell, and that ended up with the Thalmor taking most of Hammerfell. What are the remaining provinces of the Empire supposed to think, other than the Empire is incapable of protecting them? Just as the Roman Empire was not the same empire throughout its existence, neither is this one. It's become lazy and stagnant. It deserves to fall and be rebuilt by better leaders. I'm not saying that Ulfric is the best that Skyrim has to offer, but if he has vision and the influence to realise it, why he shouldn't he try?
One last thing. In the Amulet of Kings, it describes the amulet as containing the blood of Akatosh within central red diamond surrounded by eight other gems. The diamond symbolises the Empire, while the other gems are the Eight Divines. Later in the book, Akatosh acknowledges Nine Divines. Since Talos founded the Empire, he must be represented by the diamond, therefore he is a true Divine, and the Nords have every right to continue to worship him, regardless of what anyone else says. The Empire has lost its faith and its way. Let it fall so that true leaders may rise from the ashes!