I wouldn't call it an ethnic slur (since it has nothing to do with physical features and was not used as a derogatory term in the past). We throw around "grammar Nazi" or "soup Nazi" or "bus Nazi" all the time. But what's wrong is assuming everyone from Germany is a Nazi. Say the republicans (or democrats, whatever floats yer boat) committed a bunch of crimes against the people, people wouldn't refer to or lump all Americans into that party. That's just stupid.
I would say Nazi is even less offensive than "kraut", in terms of just name calling.
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