I'm pretty sure that "British Isles" is a geographical term that pertains to the landmasses of the island of Ireland and the island of Great Britain, and not a geo-political term describing the soverign nations themselves. For instance, you often hear the term "the United Kingdom of Great Britain and Northern Ireland", which suggests that the landmass containing Scotland, England and Wales is called Great Britain, and the geo-political entity known as the UK is that landmass plus the section of the island of Ireland called Northen Ireland.
Remember that the term "Britain" predates the UK by many centuries, and probably originates with the people who were known as the "Britons" who came and occupied parts of the island of Great Britain way back when, before the modern nation states existed and when both the islands (GB and Ireland) were in fact divided into dozens of sub-kingdoms. I wouldn't be surprised to hear that the French Brittany and the term "breton" are also all wound up together in historical relationships, though I could be wrong there, just saying it wouldn't surprise me.
What I'm getting at is that I don't think its racist or oppresive to refer to the combined geographical entity of the two islands (GB and Ireland) as the British Isles if this is in fact their correct geographical label, as long as it's understood that refering to them in this way is not equivalent to describing the Republic of Ireland as part of Great Britain (which even Northern Ireland is not) or as part of the United Kingdom (which Northern Ireland is universally recognised as being a part of). It's just geography, and I don't find the term British offensive or oppresive when used in this context to refer to the island of Ireland (not exclusively but including the island of GB too). This is from the point of view of a citizen of the Republic who is proud to be no subject of a monarch, a governmental system which I personally find highly objectionable, and who is proud to be a participent in a free democracy.

If I have any of this wrong, please correct me.

Hippy