Yeah, I've heard about that controversy. I think a strong warning might be in order rather than a ban. I don't like art being censored ever. Artwork should be allowed to be offensive, especially comedy. If a person doesn't like it don't watch.
My family always enjoyed Fawlty Towers. I remember watching it as a kid in the late 1980s and 1990s on PBS. The show truly is a masterpiece but also a product of its time.
Edit - The entire purpose of that episode alongside several others is that Basil Fawlty is an uptight somewhat bigoted man (made worse in this case by a head injury). The series shows these traits are not to be excused as Basil always gets himself and the hotel in trouble. No one admires him for these negative character traits and more often than not he is called out by other characters in various ways. If they start censoring the series that thread will be lost which would be a shame.