Two useful statements have recently been made; apologies if I've missed them earlier in this thread. One here is from the Morris Ring. The other appeared in a discussion on Facebook and is a quote from a letter from Prof. Ronald Hutton to a Facebook member. I hope I'm not breaking any rules/laws by reproducing it but it seems such a balanced and realistic response I think it's worth the risk. (Mods please delete if it shouldn't be here)

"What we see here is a direct clash between two different national traditions, one American and one British. The American consists of blacking up white people to impersonate black people for entertainment, often with connotations of condescension or mockery. This is, then, a tradition which could credibly be described as racist. The British one consists of blacking up white people to erase their everyday identity and turn them into symbolic figures of seasonal festivity, justice or rebellion: the overriding connotation is one of transgression of norms, and is not racist.
The problem is created when globalisation (which in this case, as often happens, means Americanisation) imposes the first set of reference points onto the second. It is the worse in that Border Morris, the tradition which blacks up, was reborn in the 1970s as the most dynamic and popular current branch of the Morris Dance family, playing up wild and transgressive traditional symbolism: it is itself a radical and counter-cultural performance art form.
There is no easy answer to this problem. It would be nice if those who make the accusation of racism against Border Morris could learn the difference in the histories from which each derive.
It is more likely, however, that the path of least resistance will be taken, and the dancers wear black masks, or paint their faces white, green or red to achieve the distancing effect, instead of blacking up; which would certainly preserve the basic symbolism, while satisfying those who relate blacked-up faces to different associations."