I am both ethnically Swedish and Arabic. I enjoy both the fantasy Norse like raiders of the North in Greyhawk and the fact that there is a fantasy Arab type of place in Greyhawk.
I do not feel the generally villainous pre 24 Suel were defamatory towards Scandinavians but I was really surprised by the 24 switch of the magical apocalypse first strike from villainous Suel to the fantasy Arabs.
The pre 24 Suel were, like most of the five boxed set Flanaess ethnicities, really mixed ethnically in most of the current Flanaess with some areas where they were the dominant single ethnicity. Mostly they had a historical migration through the Flanaess where they eventually mixed with the others in a lot of places, although with their historical cultural racial prejudice getting lots to band against them as they did so. Notable exceptions to the current mixing were the Scarlet Brotherhood southern supremacists seeking to restore their ancient evil empire, the evil Suel White Supremacist Wastri the Hopping Prophet cult based around the demigod (with frog associations!) in a southern swamp, and the breakaway viking types who long ago rejected ancient Suel culture and created their own in the far north.
As far as whitewashing the super white Suel and the ones who are white supremacist villainous organization bad guys I can see WotC not wanting those prejudice elements even though I thought having fantasy white supremacist villains to fight (Scarlet Brotherhood and their ahem possible grand dragon, Wastri himself as a campaign boss fight in the world) was an interesting aspect of the setting with decent campaign potential. I would have preferred they just left the White Supremacy unsaid and unreferenced instead of changing things to make them actively less evil. I would have preferred it to be open to both the historical presentation and the current no prejudice vibe they are going for. And they mostly went that route with the Scarlet BrotherhoodOrder still being evil manipulator monks with an assassin network and not mentioning the racial subjugation and prejudice aspect.
But switching the Armageddon first strike to make fantasy Arabs as the instigator aggressors instead of victims who retaliated is quite striking and more than a little baffling. As far as real world associations and demonization characterization having the fantasy Arabs having historically set off a magical WMD like a first strike mega terrorist tactic against their whiter enemy's civilian population is an unfortunate association to create now. It is a small detail in the history of the setting, but stands out as one of the specific changes they made to the setting.
And I don't like that change. Either that it is a change that contradicts the existing material but more so for the specifics of that change.