If racism is not firmly rebuked it will continue. Tolerating it, excusing it, dismissing it only enboldens it. Doing the right thing almost always has a price, but it is also priceless to the quality of life you will live. Don’t blame yourself for other people’s failings. Live your life, leave room for the possibility of change in your FIL someday. There should always be hope, but don’t waste your precious time worrying about it.
This was not your fault. Your husband has chosen to cut off contact with his father and IMO it was the right thing to do.
The people who are saying it’s not a big deal are probably racist in their own right. It sounds like you and your husband are on the same page and that’s a good thing.
Don’t feel guilty. Your FIL is responsible for this.
Did you put those thoughts into your FIL’s head and then force him to speak then?
No.
In no part of this are you to blame. Let your husband handle it.