Please, elaborate on how they found putting gnomes in the monster manual (with jokes about them getting a lair, badgers minions, and treasure) as offensive. Was it that they were upset that they were reduced to a creature in the monster book that is only designed to kill and take their stuff alongside orcs and drow? Perhaps they were upset that they were being considered the butt of a joke like they are in Dragonlance or Warcraft? Maybe they were upset they weren't playable (like in BECMI) or they were relegated to monsters and had to wait and get another book to play them (like dozens of other humanoids)?
I'm genuinely curious what about that skit was offensive to them. Cite specifics.