Masha,
I completely agree with you about the freshness of the movie and also about how comfortable it is because it presents the old tropes in new ways. That is what I liked best about the film, it felt like a new story but with all the stuff I love about horror. I have a Sax Rohmer book set somewhere in my kindle , and it makes me want to read the stories which is now impossible due to a malfunction of my little machine. Sigh. They are trapped in my kindle like Im-Ho-Tep was trapped in his bandages.
I don't mind the white actors playing orientals, I didn't think that they specifically included
any racist impressions, in fact, I have some empathy for both the characters here because white racism against orientals caused them to turn evil, they weren't inherently bad. And Myrna was just oversexed, it seems to me.
I do think that a few of the lines are racist. However, that being said, one of the reasons I like these pre-code films is that there is a wonderful ambiguity about the characters. Having Lewis Stone utter something about 'You scurvy yellow dog' is a little much, and his interrogation of poor Willie Fung at the end is icky, implying that as long as he's stupid and doesn't have a college degree they will let him live. So the writers here have done something interesting. That the white people get out of the situation at all is really no thanks to their morals, except for maybe Karen Morley's true love, which is the only pure motive in the whole film. They are about as clueless as can be when dealing with the indigenous peoples of the land they are pillaging and this leads to all the problems.
In most horror films of this style, the archeologists are never decent about wanting the home countries to get the wealth from these tombs, they immediately want it all brought back to England. They are pretty much grave robbers in the name of science, and that is unforgivable. Though in this film, the writers give the excuse that the whites must get the sword and mask to keep Fu Manchu from ruling the world, so that makes it alright, I guess. In fact, the action of the evil characters and the bad that befalls the good ones in this movie can be laid right back at the doorstep of the good characters, who rip through sacred seals as if they were nothing but saran wrap, thus bringing the curse down upon themselves. Had the whites not opened up Pandora's Box, shall we say, the evil would not have been loosed on the world. I think these movies shows an interesting shift in thinking about racism from the earlier, more empire oriented ideas presented in Kipling for instance. Perhaps we ought to cherish these films instead of hide their mixed messages. It may not be a perfect inter-racial world represented, but I do think that the writers purposely gave us something to chew on about our own heedless racism and empiricism.