McCain is being attacked in some corners over this exchange:
"I have read about him and he's not…he's not…he's a…um He's an Arab. He's not..."This is clearly not a response to the woman's words, but to her subtext, and to the larger set of attacks coming from some of McCain's supporters at public events. In calling Obama a "decent family man", he's not saying that Arabs cannot be "decent family men".
"No ma'am. No ma'am."
"No ma'am, no ma'am. He's a decent family man, citizen, that I just happen to have disagreements with on fundamental issues."
Does anybody believe he was saying that non-citizens can't be decent family men? Or that Arabs can't be citizens?
This was an off-the-cuff remark. Banter. You can fault him for not trying to shut down some of the anti-Obama rhetoric earlier if you wish, or for not going far enough in his response, but I see no evidence at all that this was an insult directed toward Arabs or Americans of Arab descent.