In Mass Effect, Race and Nation are pretty much inseparable within council space, and this is a logical progression simply because once a species is introduced to the galactic community, all internal threats become minuscule in the face of the external ones. Internal conflicts arise or continue, but no sane member of a species would risk causing a collapse of the current order while alien fleets were potentially waiting at their doorstep with a big can of Extinction.
A key difference in Xeno-nationalism and our classic idea of racism is that the aliens will always be aliens to us, and us to them, and there is no real way to bridge that cultural gap and integrate into each others' society. By their very nature, we cannot interbreed and their capabilities, physical and mental, are inherently different than ours. It is not racism to state that dogs cannot read and write because they lack the physical and mental capabilities, it is simply a statement of their limitations as a species.
Russian can marry an American and produce children that can be more closely defined by where and how they were raised than their ethnicity. Culture, rather than race defines Nations within a species. On the galactic scale, each species that was the apex on their world, is now competing against other species for the scarce resources of the galaxy. Culturally, they must realize that they are one of many competing species in an enviroment rather than competing populations of the same species.
The closest that two alien species could ever come to an integrated culture would be a caste system, and one would inevitably be dominant over the other. Any other arrangement would inevitably result in the weaker species being pushed out or otherwise marginalized by the stronger, weather by economic or physical means. A major population unbalance between the two would cause civil unrest as the minority group felt threatened by this potential outcome, and fighting would continue until one group was dominant.
Ashley is not a racist, and I would go to say she has a clearer idea of historical precedents than most of those claiming that she is, and even my Paragon Shepard doesn't attempt to change her views on the subject. Even though we should cooperate with the Council when it serves us, or we cannot reasonably act in opposition to it, we should recognize that aliens will never be humans any more than humans will be Turian, Asari, Quarian, Volus, Salarian, Krogan, or Batarian. As integration is impossible, we must settle for survival through Coexistence or Displacement. If we choose Coexistence, we will be either dominant or dominated, and I for one would prefer to be dominant.