It's odd to me that folks see this as proof he was a racist. I think this is proof that at this point in his life he had poor judgment, was incredibly insensitive, and perhaps enjoyed shocking people's sensibilities.
But to me, if he was truly racist, this isn't a picture he'd have selected. I'm fairly sure that advertising blatant racism was not OK at that time, in that place, but rather this picture was seen as showing something else, but in today's climate, in a broader context than just the recipients of that yearbook, it's a sign of something else.