Exoticism- towards Catholics?

As a college student, I suppose it is inevitable that you will start to form connections between material taught in different classes.  With words and phrases fresh in your mind from an earlier class or from last night's homework, these phrases jump into your head almost unbidden in the midst of a seemingly unrelated discussion.
In my Irish Literature class, we discussed the problem faced by Irish nationalistic writers (such as W.B. Yeats) in trying to counter the British (exoticism) stereotypes about the Irish: that they were drunken, boorish buffoons, full of sentimentality but completely unable to temper their wild passions with reason or with restraint.  In order to counter these stereotypes, they would sometimes take and "flip" them into their positive versions: instead of sentimental and childish, the Irish were to be extolled as romantics.  Instead of a lack of rationality and productive work, their aims were to foster the arts and to create beauty.  This approach, of course, did nothing to dispel stereotypes because it continued to stress how alien the British and Irish were to each other.  The subtext remained: "But they just aren't like us."
Shadows seems to suffer from the same problem.  Instead of noting similarities and cooperation between the Catholic Spaniards and the Muslims, the novel seems to denounce the Catholics as the barbaric "other"- even associating them with the smell of body odor (an orientalist and derogatory accusation often leveled against people from some "eastern" cultures).  This discourse seems to be counter-productive.  While Don Inigo does serve as an example of sympathetic Catholics, the overall impression remains that the Muslims have honor while the Catholics have none; the Muslims show mercy where the Catholics would not; the Muslims honor their agreements while the Catholics betray; the Muslims are cultured while the Catholics are barbaric.
Does anyone else find this discourse problematic?