"You must not teach our secrets to the Gwai Lo!"
seems like this very recounting is why lots of Kung-Fu people know what Gwai Lo means in the first place?
The fact that WJM is associated with any of it makes it seem like he's associated w/their beliefs, as opposed to just being an attack dog?
I dunno. I never thought of the racial connection myself, so maybe others don't either. But it looks like the association is there when pointed to it.
If in all these years, no one has ever confronted WJM as someone who denied training to "Gwai Lo", then it is a non-issue.
But if he had to deal with people saying to him, "How could you deny training to someone based on the color of their skin?!" then I think he is right to rebut the incident recount as a mischaracterization of his practices and ethics.
Someone's playing the race card, just not sure who!