Yeah generally dress up is fine, I think people shouldn't be barred from wearing a costume just because their race doesn't match. And for children especially, if they dress up to be a hero of a certain race, I think that is more representation of diversity in a good light.
However, IMO there is some due respect for that culture and it would be better to understand the significance of a dress one may wear, but if it's intended well most should be fine with it. Using casual stereotypes and jokes cheapen the outfit which I think can be in bad taste.
Like as long as they don't accompany it with racial slurs, I don't think it's a hate crime, just a bit cringey. It would be about the same level as if someone were to dress up as the Catholic Pope, a cardinal or a bishop and give people silly blessings.