I don't think it's the worst they could have called her but I think it's at least mildly racist, not unlike calling a Mexican a "bean-eater". Just because it's not in common usage and we're not used to hearing it as an accepted racial term doesn't mean it's not racist. I might get called a "princess" in the sense of a coddled young woman, but it's unlikely anyone would think to call me a "pappadum" since I'm not South Asian.