Going even further down the rabbit hole, "mongol" used to be a medical term for Down's Syndrome. It was used to describe the physical aspects of the syndrome, long before the chromosomal link was understood. Wikipedia shows that it appeared in scientific journals as late as 1961.
So, at the time, Tolkien was actually using a more "scientific" physical descriptor, rather than a simple racial term. The M word was an acceptable phrase then. It's not now. See also: idiot, hysteria, etc. There's lots of cases to be made of racism in orc history, but this is a particularly weak example.