See this is why I hate PC.
He made ,what I thought at least, was a resonable and respectful comment and it totally got overlooked over the use of a "term". It's kinda like saying, using Jesus as an example, "All sinners are forgiven." And everyone gets up in arms because Jesus used the word "sinner" forgetting the nice comment in the process.
I'm not saying if you find something offensive not to bring it up to them but I've always acknowledged the compliment.