Yes, I was talking about marketing message, and I was interested not in legal conclusions but in personal reactions to the actual material (which is a narrowing window of opportunity now that the lawsuits have hit). I don't think that racism can be legislated away; i.e., that we can pass a law that says don't be racist. But, I wonder if we can attach penalties to racism, like feel free to be racist but accept that you'll openly be labeled racist. One big problem with this scenario, of course, is how to pinpoint racist conduct to label - what meter stick to use.

I did not flat out answer your question because it is a loaded question. By even giving a simple 'yes/no' I would be admitting that A&F are promoting a racist philosophy, that they are (in your words) implying 'that beauty and sexual attractivenss are a white privilege and that to be popular and desired you need to fit the WASP ideal'. I do not agree that that is their message. I think they look at the majority of the people wearing their clothing and cater to them in their advertising. Just like any other company does. I agree that all races wear A&F, but the majority of people wearing this stuff are young white males. So they advertise to them. They have non-white models to a lesser extent, because they make up a smaller percentage of their client base.
Just as Nike uses primarily african-american athletes, FUBU uses primarily african-american models, Barbie advertises to girls, truck commercials advertise towards men, etc. They are not promoting some hidden agenda, they are advertising to their demographic.
So, with that in mind, my answer would be 'no' they shouldn't, and I don't believe that to be the case here.

Well, self-image being how an individual sees oneself, I judge this statement as hogwash. I have NEVER heard anybody complain that they feel worse about themselves because of a commercial advertising jeans and a t-shirt.
The bottom line is : they should be able to advertise to anybody they want. IF they are pushing an agenda of 'white is better' or 'black is better', then they should be honest about it and face the issue. But again, I really don't think that is what's happening here. If they refused to sell their clothing to non-whites, then there would be an issue, but I have not heard of this being the case.