While the Stormcloaks, they are being racists because they are, they aren't forced to opress the people, they choose to opress the people.
By signing the peace treaty, the Empire hoped to gain some time to build up the strength to crush the Thalmor. The Stormcloaks are preventing this.
This is a good point and helps me with the decision of who to side with. I'm sure not happy with the banning of talos worship but it was that or the elves would just keep it up untill the empire did lose outright, millions dead or enslaved, the empire didn't have a hell of a lot of choice.
The Stormcloaks and Ulfric however have a choice whether or not to treat other races like crap just because they're different and they've made their choice very clear.
On an aside i'd want to thank bethesda for a freaking awesome gaming experience, traveling Skyrim and basicly learning empire = bad, stormcloaks = noble nord heros i finally headed to Windhelm to find other races forced to live in filth, harassed and insulted. Shocked I figured well perhaps Ulfric is being manipulated from seeing how bad things are, he's busy with the war after all, men's lives are in his hands. I head to the palace and i was freaking appalled at what I overheard, i had no idea what i was going to do, who to side with.
That's when it hit me, this was a completely fictional situation, in a completely fictional world but with this flood of emotions that events and these characters elisited from me it was like I was really part of it. Totally awesome. RPG gaming as it should be.