There are different degrees of racist. There's David Duke racist, and then there's Imus racist. The former view minorities as inherently evil or lazy and therefore valued less as members of society. The latter view minorities as characterized by stereotype. The strereotype may be good or bad, i.e. black athlete are fast or "nappy-headed," Hispanics work hard for very little money, etc. Objectively, the latter is not as sinister as the former (subjectively they are because they are based on overgeneralizations and ignorance).
However, there is a tendency to start to relate physical characteristics and societal conditions with the human nature of the group you are talking about, and that's what's really bad because there is no universal human nature among any group. Taking the word "ho," which we would presumably all agree is urban slang and an insult, and then adding "nappy-headed" to it is basically to make a physical characteristic of the girls' hair some sort of indicator that they are inner city thugs or prostitutes or what have you.
That's where the insult is, in my opinion: its taking a physical characteristic which may be generally observed and then associating it with an insult.