Michael Brendan Dougherty puts the Paul newsletters in context:
These newsletters were published before a decade of war that has exhausted many Americans, before the financial crisis, and before the Tea Party. All three made Ron Paul's ideas seem more relevant to our politics. They made anti-government libertarianism seem (to some) like a sensible corrective. But in the 1990s and 1980s, anti-government sentiment was much less mainstream. It seemed contained to the racist right-wing, people who supported militia movements, who obsessed over political correctness, who were suspicious of free-trade deals like NAFTA. At that time a libertarian theorist, Murray Rothbard argued that libertarians ought to engage in "Outreach to the Rednecks" in order to insert their libertarian theories into the middle of the nation's political passions. Rothbard had tremendous influence on Lew Rockwell, and the whole slice of the libertarian movement that adored Ron Paul.
But Rothbard and Rockwell never stuck with their alliances with angry white men on the far right. They have been willing to shift alliances from left to right and back again. Before this "outreach" to racists, Rothbard aligned himself with anti-Vietnam war protestors in the 1960s. In the 2000s, after the "outreach" had failed, Rockwell complained bitterly about "Red-State fascists" who supported George Bush and his war. So much for the "Rednecks." The anti-government theories stay the same, the political strategy shifts in odd and extreme directions.
As crazy as it sounds, Ron Paul's newsletter writers may not have been sincerely racist at all. They actually thought appearing to be racist was a good political strategy in the 1990s. After that strategy yielded almost nothing – it was abandoned by Paul's admirers. You can attribute their "redneck strategy" to the most malign kind of cynicism or to a political desperation that made them insane. Neither is particularly flattering.
I'd say that both are pretty disgusting. Ed Kilgore has more on why today’s "wild and wooly GOP is a much friendlier venue for the Ron Paul Revolution than it’s ever been."
The Dish 