How was his story twatty, and how was he being a bellend to his mate? By calling him a peasant? This whole affair seems to stem from taking everything literally, of course everything is going to be offensive when you ignore the context. The title was blatantly intended to be humorous and should be taken as such, just because someone doesn't like/understand the joke doesn't automatically make the teller a dick.
As much as I hate to say it, it was just banter.
And no genuine racism/homophobia/whatever shouldn't be allowed, however when used in certain contexts its fine. I don't get but-hurt when a mate takes the piss out of my sexuality by calling me a fag, I know that he's just messing around and that's fine. That sort of thing is acceptable.
It's a similar story here, PC Master race is a bloody joke, a meme. If you honestly take it seriously (as in consoles/console players are genuinely inferior) then you're a bit of a twat. But that clearly not what the OP meant.
Again as much as I hate using the word, it was just banter.