This topic touches a bit on my post about Exceptional Girls (8/15/06), although in a different dimension.
I'm writing a fantasy story set back in the 1850s. Most Europeans and Americans back then held very racist views. A significant portion had no problem with slavery, or if they did, they still managed to justify it. Even those who were against slavery, were often against it not on moral grounds but on economic ones. And even those who opposed it due to morality did not necessarily hold non-racist views. Racism permeated our societies for the most part, with a few exceptional pockets.
So, in writing about these characters... how much racism should I write in? If I want to be realistic, the characters ought to be holding views and saying things we'd find totally appalling in modern society. But, do I really want to have characters who are so reprehensible by modern standards? Will my readers be able to like and/or relate to any of them? Do I have a moral duty to say in some manner that these views are reprehensible if accurate, or can I rely on the course of history to have proven that for us all? If I do make one or more of the characters a bleeding heart abolitionist, will it be very believable? Or true?
They aren't easy questions, and I suppose the answers lie in balancing things out. But deciding where exactly to draw the line, is indeed a challenge.