It would seem that Gary had his reasons for not wanting to play with Elvis. To me these reasons would have to be pretty important to draw the line in the sand that way. Ed Fuqua posted to a link to some "racist" stuff that Elvis said and perhaps this is the mitigating factor in Gary's behavior.
If I had knowledge of that or other "racist" speech or actions by Elvis, I wouldn't play with him either out of principle.
Armed with ONLY that knowledge I would tend to agree with you. But I know EC's lyrics pretty well, and they are pretty provocative, as are some of the things he says in conversation, interviews, etc. But whenever those "provocative" lyrics are used, they are used for a specific purpose -- usually DRIPPING with irony and sarcasm. For example, there's a line in 'Oliver's Army' that says "All it takes is one itchy trigger, One more widow, one less white ******"... the statement by itself is obviously offensive, but the song refers to Oliver Cromwell's "New Model Army" -- and is basically anti-military. Many poor Irish joined the army because they would starve otherwise. The "white ******" here was a common epithet used by some English to describe the Irish at one time. It says nothing about EC's feelings toward African descendants.
Take also a line from another tune, "blame it all upon the darkies." Obviously pretty offensive again. But it's used in the context of quoting some anonymous but bigoted dirtbag. Lyrics are debatable always, because even if you read them end to end, you don't always get the whole meaning, like you would in a novel for instance. You don't hear anybody screaming about racist remarks in Earnest Hemmingway books but ever read em? hooh boy. It's all in the context.
But if you heard Elvis's explanation of that episode, he claims that he said the most offensive thing he could think of just to end the conversation, which he thought was nauseating. Now, you may not agree that it was the right thing to do, but it's something I might do myself. Of course, if I was a famous person, I'd probably think twice, knowing that I'd be quoted out of context, but then again, he was also pissed drunk.
There's always more to the story.
I'd certainly like to hear more from Peacock about it.