Are you sure that he was reacting the way you thought he was? My question is, are you positive where his reaction came from? My oldest would have seemingly inappropriate responses to things which turned out to be perfectly logical appropriate responses that were misjudged because we project our own feelings, fears, etc.

In any case it sounds like a missed opportunity to educate him in a non-confrontational way. Children usually learn prejudice from their parents. Where would he get this attitude? Are you even sure he understands what he was projecting?