Given how Wagner was himself virulently racist and anti-Semitic, I agree it's not hard at all to read offensiveness in his works. Incidentally, I stumbled across a link that says Nietzche's break with Wagner came mostly over the latter's conversion to Christianity. It was probably a combination of many things, as usually happens with relationships.

Ironically, wasn't Nietzche himself blamed for providing philosophical underpinnings to Hitler's rise? I remember reading this was in total opposition to Nietzche's own beliefs, though, and that his sister edited his works to distort them.