Thank you for sharing your perspective, Traveling Ballerina! Your story led me to https://www.yellowface.org/choreography
where people seem to be pondering the same questions I am. The website gives some interesting historical perspective and encourages companies to reconsider the choreography, makeup, and costumes used for the Chinese variation. There are more questions asked than answer, I feel, but they do post a video of the San Francisco Ballet version to demonstrate how Chinese can be done with less stylized makeup and movements. The suggestion on the site is that we must understand the difference between between "caricature and character," which seems wise. I can certainly now understand how the use of a particular style of makeup might be offensive to some.
And yet, I have more questions than answers. I find myself thinking back to years and years of dancing Spanish, using eyeliner to draw spit curls onto my face per my company's direction. Did some consider that offensive? I've also performed Arabian a number of times, with greatly exaggerated eye makeup in an attempt to appear the true "Arabian Princess." Was that an offensive choice? I'm unsure.
This isn't an ethnic issue, but what about the makeup and movements used to "age" dancers playing older characters? I'm thinking of the grandparents in The Nutcracker. I, myself, was cast as Berthe (Giselle's mother) and Cinderella's Step Mother in my late teens, during a time of injury and being unable to dance other roles. I remember being coached to use makeup to give myself wrinkles. Was that offensive to some? I'm unsure of that also.
I have more questions than answers, but surely this will become an ongoing discussion in the ballet/opera/broadway worlds where, in a sense, we are always creating a caricature of someone.