Not sure if you’re joking with this or not. I assume you are. But either way, you’ve provided me with a New Thought: is it even possible to be racist regarding beings that don’t actually exist? And if so, in this case wouldn’t it more accurately be considered species-ism? Since dwarves and elves and humans are so clearly different? I mean, in the context of the LOTR universe, I can’t see anyone saying that Elves and Dwarves are the same species. Sure, in D&D you’ve got half-elves, but not in LOTR i don’t think (?) But there’s another point here: in the context of LOTR, racism is okay, isn’t it? I mean, I don’t recall any wizards or halflings showing any love for orcs and trolls and kobolds or whatever: it’s perfectly okay for the “good” denizens of Middle Earth to hate and kill orcs and trolls and dragons whenever they like, and with impunity too.
Is it racist to say I wouldn’t want to work with Shelob, eat with Shelob, or let my brother marry Shelob?