Yeah you are correct that the racism angle is a bit overblown. Although it's a terrible episode even discounting that
My picks for atrocious TNG episodes
I think the worst one is Outrageous Okona. It's really is a cringeworthy bad comedy. Bad comedy is worst than bad drama
The Royale is also awful along with Shades of grey. We talked about sub rosa a way back as well.
Symbiosis (drugs are bad), last outpost, angel one, justice, Samaritan snare
Hell just pick any random season 1 episode
I also dislike Homeward a lot due to it morally dubious ethics of encouraging superstition and Picard defending letting the entire planet die.