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Well, or, I guess I can’t say whether it is or isn’t racist; it’s uncomfortable because of the overlapping otherings of “Elf” and “Native American” with differing and weirdly clashing valences. But I think it’s intended to be inclusive and positive.
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The thing that leaves me uncomfortable is that it also sorta ends up being an erasure of Native people from the setting. Not intentional, but hard not to notice. Not that you couldn’t jhave a Navajo Gadgeteer, of course, but… there’s still a kind of erasure. (I think?)
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Anyway, big can of worms. The Western's a genre where complex issues are inevitable: Westward Expansion = genocide & colonialism. It’s an inherently thorny genre. Which is why a jumbled non-"Old West" setting appeals more to me. Either way, I really dig the game design!