I think morrowind is the gold standard for beeing offensive in video games.
Sure half of the insults were made up but they felt genuine. You found yourself in a world where everyone resented you for beeing an outlander. It was a world with slavery and all kind of nasty stuff.
And yeah, in general i think that beeing consistent with the world is important, but do not pander to people that take beeing offended to a political level. Nothing good ever came form that.
