My grandfather was killed in the infamous Sandakan-Ranau death march in Borneo [
http://www.sandakan-deathmarch.com/ http://en.wikipedia.org/wiki/Sandakan_Death_Marches]
so it could be argued that I have a bit of an axe to grind with the Japanese.
However, never during the time that I was growing up did I hear a single racist word from my parents or grandmother on the subject, and they never referred to "Japs". I have quite a few Japanese colleagues, and there is much I like about Japanese culture - their films and cuisine, for example.
My opinion is that in-game and, as a consequence, in these forums "Jap" and "Kraut", "Yank" and "Tommy" and other epithets can be reasonably applied and understood to be used in historical context and moreover to be directed into the past, not to be directed at currently living people.
In real life, such terms would be unacceptable if one's life is directed towards facilitating greater understanding and trust between people. I would hope that people intelligent enough to play these games could readily make the distinction between game "smack talk" and the players' true life philosophies, just as sports can create allegiances and cause otherwise reasonable people to engage in all kinds of mud-slinging, all of which is forgotten outside the context of the sport.