Why woud anyone not want their kid to do this if not for racist reasons?
As an atheist, I once discussed with a Muslim co-worker as to whether he thought it was a good idea for me to send Christmas cards to my Muslim neighbours. I was thinking Santa and Xmas trees rather than nativity scenes, my thinking was that it was 'compliments of the season' and I'd be honoured if I received an Eid Mubarak card or some such from them.
He told me that it'd depend to an extent on the nature of their household's faith but it was likely that it would cause offence as it'd be interpreted as them 'supporting' an alternative religion. (I'm paraphrasing as it was a while back, sorry.) So I can see why, rightly or wrongly, some parents would want to hold their children back from such activities.
It's still not racism though. It's intolerance, ignorance, fear and indoctrination, but it's not racism.