Personally, I hate the idea of ethnic cleansing or any talk about treating people as not being human because they are of a different race. I do however understand that we are talking about a game and the ramifications of a hypothetical timeline.
If I was the GM, and my PCs were talking in this way, I'd let them have it, then hit them with the consequences. What do you think would happen to the many millions of Mexicans that are living relatively peacefully within the US borders would do when the news got out that "Anglos" were using WMDs to clean out "American" towns of undesirables.
I think there'd be two outcomes taht you could hit the PCs with:
1) The Mexican Army which is shown to be rather lacklustre and reluctant to pursue the war would suddenly have a massive reason to fight with everything in their power. Granted this may not be much depending on your assessment of the Mexican army, but I imagine troops pressing attacks with much more vigour, any defences may well be fought to the last man against the evil Gringo and Mexican may well no longer take prisoners (if they ever did in your universe).
2) The relatively peaceful mexicans within the borders would be seriously radicallised by such actions. Your PCs may operate a shoot on sight policy against Hispanics, but eventually they'd run into IEDs, maybe even suicide bombers haunting their every step.
So whilst it's distasteful, I'd say, let them have it but make sure that the Mexicans are as nasty as the PCs and react to what is done to them in an agressive fashion rather than letting them act as cannon fodder. taht way the PCs will learn that they reap what they sow.
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