Everyone should look at this and be afraid. Not just people who perform drag or dress in drag.
Personally I think banning it under first amendment grounds sets a dangerous precedent for everyone. You could simply say that first amendment protections don't extend to activities that need to be approved by the university.
And then to further qualify it and say even if it's in the form of "protest" it wouldn't be allowed because people won't understand it is even worse.
It doesn't need to be understood to be a protest. There doesn't even have to be a message.
By the way Blackface IS protected by the first amendment.