I actually made my own topic on this very issue a while back:
which was later incorporated into a more expanded topic:
My main point still stands: realism does not inherently make a story good, especially if that realism is mainly being used to hurt minority players. Now, that doesn’t mean that stories that deal with realistic bigotry can’t be good, but these are stories that have to be written about bigotry. A story in which the bigotry is incidental can end up normalising it, which I’m sure is not what you want.
This is doubly true for interactive fiction, especially if minority players are forced to experience bigotry just to play the game while white cis straight men can enjoy it without any issues. And if your story is forcing minority players to be told how much the world hates them, then the game is inherently bigoted, even if that wasn’t the author’s intention.
Admittedly, it can feel cathartic to fight back against bigotry and win, but that would probably require that the player was forced to play as non-white, female, or LGBTQ+, and thus forced to fight back in the first place, and I’m pretty certain you don’t want to do that. (Also, I would suggest that such a story be written by somebody who has experienced such bigotry.)
Now, regarding the idea that you can’t have a story set in the 1920s without bigotry, well, there’s a lot more to the 1920s than the bigotry, and while the 1920s of your story will be different to the actual 1920s, it was always going to be. Even if you put aside the supernatural elements, your story will be rooted in your own cultural understanding of the 1920s, and will definitely contain your own more modern cultural sentiments, in other areas at least. Also, this particular change will mainly only be noticed by people who are minorities, so why not go the more inclusive route?