I'm completely ignorant here, but was it really considered racist because he was a chimney sweeper who had sot in his face and thus people nicknamed him Black Pete? (like I said, completely unfamiliar with the character)
It's more like it used to be a more blatant racist blackface caricature, old Dutch people were like "Whoa, this shit is kind of unacceptable when you think about it", so they changed the mythology to incorporate the chimney sweep story. This attempt to reclaim the imagery is where most of the disconnect comes from. People associate blackface imagery with Zwarte Piet now rather than black people, and thus think folks that try to re-connect the dots are seeing things that aren't there. They're now in an uncomfortable position where think if they admit that Piet looked racist, they may have participated in public acts of racism for years/decades. I'm sure that sucks to come to grips with, but I'm sure 3D printing technology will one day provide us with violins tiny enough to do this justice.
The chimney sweet explanation was insufficient anyway, since I don't know what type of chimney would give you curly hair and red lips. If people care so deeply, they should put that care into making it better.
There should be a different solution.
Kids can now easily recognize who Piet is.
It completely demystifies him.
It's like Santa Claus without his beard.
Well, how do other countries deal with real life depictions of Santa's elves? As far as I know, they don't have elaborate disguises on.