(The short after-Christmas update (an addendum to this post):
I think that, by this time, we should be operating under the belief that Ron Paul is a racist (to whatever degree — a homophobe, maybe slightly racist against certain minorities [I, as someone who comes from Jewish family, still do not really believe that Paul is antisemitic], et cetera). I do not know if he wrote those newsletters — we can assume it was Lew Rockwell —, but I think there is sufficient evidence elsewhere that suggests that Paul might suffer from a small racist bend.
I still think that people focusing on the issue are ignoring more important issues — even abstract philosophical ones (I also think these people are hypocritical, since I think everyone holds minor racist tendencies — I want to see Brad DeLong in a poorer district of Los Angeles someday). The most important ignored principle is that of broad liberatarianism: it is absolutely OK to believe that you want to believe, as long as you do not impose these beliefs on others through coercion. Of course, we can make the argument that even pure libertarian societies necessitate coercion (even anarchist societies) — but, broadly speaking, we get the idea. That Paul may be racist does not mean that he will legislate in a racist manner (and cutting welfare is not “racist;” it just happens to be that those who receive welfare are the poor, who are probably disproportionately represented by minorities).
What is important is that Ron Paul sticks to his libertarian principles, not the particular morals/values he holds (and how he subjectively rates that around him). Regardless of how Paul acts around gays and minorities, I think his track record proves that he sticks to his principles over his opinions.
(By the way, what [white] politician is “attached” to any poor minority group? I doubt that even Obama had much interaction with poorer black communities. I think that blaming Paul for being “dis-attached” is more than a little hypocritical.)
EDIT: Here is Gene Callahan with some important background information and his analysis of how Paul’s different beliefs weigh in,
They were a cynical part of Rothbard’s “reach-out-to-the-rednecks” strategy. That is exactly right. When that didn’t work, that angle was dropped.
Rothbard would say or write whatever it took to forward the revolution. He was a Leninist turned inside-out.
All that being said, how important are the newsletters? They were bad, but I’d rather have the GOP nominate someone who cynically reached out to racists than someone who might kill 100,000 Iranians.
Also, see this article by Michael Dougherty (Business Insider).