If anyone was curious about the USPTO's reasoning, they've had the following clause in the books for a few decades now:
"If during the course of examination of a patent application, an examiner notes the use of language that could be deemed offensive to any race, religion, sex, ethnic group, or nationality, he or she should object to the use of the language as failing to comply with 37 CFR 1.3 which proscribes the presentation of papers which are lacking in decorum and courtesy. The inclusion of such proscribed language in a Federal Government publication would not be in the public interest. Also, the inclusion in application drawings of any depictions or caricatures that might reasonably be considered offensive to any group should be similarly objected to."
http://www.uspto.gov/web/offices/pac/mpep/s608.html
Obviously this passage refers to patents but it stands to reason they would use similar standards for trademark evaluation.