We have two issues here:
A baying crowd insulting players, hating players, disrespecting and abusing others and racism.
There are some grounds which especially in the 70s, 80s, and 90s were bear-pits. You had to be careful and it was hostile. Occasionally Maine Rd could be like that too. I remember when the opposition used to run out at the Kippax, the hostility was fierce, everyone would boo, and barrack in unison. It's much diluted now.
But we aren't talking about hostility and denigrating your opponent here. 'You fat bastard' is not the same 'as you black bastard.' Some people think it is but it isn't. Just don't use racism.
Personally, I try and be respectful at all times, and for 99% of the time I am, but I lose it especially if its Liverpool or Utd. I think you can support your team passionately without abusing the opponent, but I don't have a problem with City fans hating Liverpool or Man Utd players but surely we can distinguish between what is acceptable behaviour and what is not.
By and large City fans do not. I have heard it occasionally, but it's not a big deal, and I can say that for most clubs too. However I do feel that racism is there just a little under the surface and that if we had a few Arab footballers, or Pakistani footballers, they'd really get it. Another issue is that Britain thinks of itself as a very free and open society but I do not think it is at all. The biggest reason why football hooliganism stopped was because the state was hard as nails. There's CCTV everywhere now. People do not say what they think, because they know they can't get away with certain behaviour. So when people say racism is much reduced compared to the 1970s, I would say no it isn't. It's just not expressed as vocally as it was because freedoms have gone. This is a fact, whether you think that is good or bad is another issue.
I prefer the situation in continental Europe where you might get a whack over the head from a riot cop, but you can whack them back, and you wont wake up at 5am the next morning to a police raid.
This is a black and white issue. Racism is unacceptable at football. But yes we should be able to abuse and insult the opponents club. Whether you do or not is up to you, I prefer to just cheer the City shirt, and largely I do that. I think City have always been known as a fair crowd.
I admit this is a confusing issue, and I am probably confused myself as to what is OK, and what isn't but I have never used racial abuse at a ground or in any circumstance and anyone who does, whatever the provocation deserves what they get. It shouldn't even enter your head to get at someone by using race as a weapon.