Not quite sure on this one Tegan. On the one hand, I agree with you- because of the history of it all- unlike black and white minstels and gollywogs.
However, many of the people watching, of all ethnic backgrounds- may not realise this and feel really uncomfortable. We have to remember that slavery, discrimination (apartheid ended very recently), etc- some people are really sensitive to this kind of representation.
Would the Morris dancers have been any less enjoyable and talented, and having massive fun- had they chosen to colour their faces blue or green. This especially post Brexit and the rise in racist attacks in the streets, schools, workplaces, etc.