The fact that skin color is such a sticking point for some people that they start throwing insults is pretty telling, isn't it?
Even the fact that it's just aesthetics notwithstanding, unless you build a time machine there's no way of possibly knowing exactly what people looked like back then. Just guessing is all anyone can do, and your own guesses are no better than Paradox's.
Murals
Paintings
Art
Histories
Play and Poetry
Pottery, on occasion
You're right in that there's no way of knowing EXACTLY how people looked back then, but then we might as well make Erik the Pagan look like an Igbo tribesman, and Mansa Musa look like Varg Vikernes, because we have no idea what they looked like.
We do have a very good general idea, and from the social situation and commentary back then (especially the Moor-hating Reconquistadors holding up their pale arms to show blue veins), we know that
highborn Spaniards and Italian tended to be pale. From paintings and murals we know their hair was generally black.
The only exception that I know of is the obviously the Sicilian Normans, whose hair color would range wildly from black to red to yellow.
If it's racism to want historical rulers to look like they are described (for example, Henry II of England doesn't look anything like how chroniclers write that he did), then people suffering from true racism should be deeply offended. For that matter, the characters' traits aren't all right either. Take a look at Caligula's traits and tell me they describe his personality, as historically described.
It would be a bit of work and research for Paradox (though reading and insertion of traits/appearance should be a lot easier than adding in events and molding faces), but it would add so much to immersion.
This is nothing about race, and all about immersion and reality.
