Your son could say, "Woa, I didn't know you were that kind of person!" and walk away.
Ignoring the comment is condoning it. Handle this with grace, dignity, and the law.
Every child has the right to a free education. "Free" not only means gratis, but also free from fear, persecution, feeling vulnerable, threatended, or unsafe.
Familiarize yourself with the district's code of conduct and your state's anti-bullying position (ex: http://tlo2.tlc.state.tx.us/statutes/edtoc.html Look at Ch37)
After the appropriate official(principal, counselor, assistant principal or whomever) has addressed the situation (this shoul be swift), send an email to the district's superintenedent, a letter to the editor of the local newspaper (you can remain anonymous), local radio station, and local television station expressing your appreciation of how the situation was handled (there should be at least one...sometimes you have to put something under the "microscope" to find one positive thing on which to comment) and one way that the process could be improved.
The entire community should know that this is intolerable!
Make sure your child's teacher knows about it; teachable moments shouldn't be lost.
I am a teacher. A similar thing happened several years ago in my 8th grade class. Guess what our research paper topic was! Yep, a biography! Each student was provided a list of people from the referred-to race, and a few of the person's contributions. Each student chose a person; no one could duplicate another's choice. They also had to choose someone opposite from their own gender. Only one parent complained.
People are not for hurting, and sometimes adults have to teach this to other adults. Children do not come into this world with innate intolerance.