Shylock the Jew was stereotypically painted as avaricious, cunning, deceitful, and yet Shakespeare gave him one of the most impassioned speeches ever made in protest of prejudice and hatred...hath not a Jew eyes?

Actually, Shakespeare's character would have been most unstereotypical by his audiences. In an online essay, Shylock and History, Jami Rodgers points out all the ways in which Shakespeare busted past the stereotypes of his day.

You're right, though. I think the most villianous of his characters is Iago.