Usually when people bring Lovecraft's racism I don't find it an interesting discussion. The man was a terrible, terrible racist - even racist by his own day's standards. I'm not sure what to do with that, though. For a contemporary author it would change how I felt about reading their work, but for a dead author with public domain works, there isn't much I can do about it. And I don't need anyone to tell me he was racist either, It's impossible to actually read Lovecraft and not notice the flagrant racism baked in.
This article is more interesting in that it tries to tie Lovecraft's xenophobia in as a foundational piece of his work. I'm sure it was very important to him, but the foundational horror of Lovecraft isn't xenophobia, it's our insignificance. Lovecraft's characters encounter the Total Perspective Machine - that's why they go insane.
I don't agree about horror of the At the Mountains of Madness. In fact, it contains the least xenophobic thing Lovecraft ever wrote:
What a facing of the incredible, just as those carven kinsmen and forbears had faced things only a little less incredible! Radiates, vegetables, monstrosities, star-spawn—whatever they had been, they were men!
By calling the great old ones men, he eliminates xenophobia and replaces it with the idea that even star-spawned monsters are nothing. The spawn of Cthulhu and the Mi-Go are the same - merely people. And Kadath reveals that even our gods are nothing.
Lovecraft was sure that if we could see how meaningless we really were we'd lose our minds. The monsters are just metaphors for that. I think Lovecraft would have been able to write what he wrote without the racism (were he not racist) and it wouldn't have hurt the underpinnings at all.