The real question is: is Jar-Jar the biggest problem in the Phantom Menace? In other words: does cutting him and the racist undertones of the character improve the movie that much?

I think there's more to be said for the solution Emily Asher Perrin had on Tor.com some months back (see link below). She read an article (linked in hers) which stated that George Lucas is primarily a visual artist who considers film to be an entirely visual medium. "Which is when I decided to watch the Star Wars prequels with the sound off."
George Lucas has never really cared about dialogue; he has apparentely called it "a sound effect, a rhythm, a vocal chorus in the overall soundtrack" of a film. The script is "a sketchbook" and he’s "not really interested in plots".

so, she eliminated the most problematic aspect of the prequels by turning it on mute and watched them all over again with the soundtrack playing on CD. Granted, this didn't help E1 as much as the other two, but at the very least: "Jar Jar is far less irritating when you don’t hear him, a slapstick vaudeville-looking creature with the whole schtick down pat."