Excuse me if I think that's a pretty darn elitist position.
Well, it's a good thing that's not my position, or even vaguely related to it. My position is this: it's not enough for a Rider design to be something someone looks at, goes "That's cool," and then forgets about entirely. That's not good enough. A good Rider design, or really any good superhero design, will stick in your memory and inspire curiosity about the fiction. It will be something you can look at and look at and look at, across various media and merchandise, without tiring of it. A good superhero design combines all the principles of commercial art design and packaging design, along with the demands of whatever the narrative in question will be.
If someone glances at it and has a "spontaneous positive emotional reaction," that doesn't really say anything substantial about the design. It doesn't matter who that person is, whether or not they're into the franchise already, or what their demographic stats happen to be. The problem is that the reaction is transitory-- they're not acting on it. If you had said your friends had seen the Gaim designs and immediately wanted to watch the show or buy some FiguArts, I would be impressed. That would indicate that looks alone made them want to engage with the material. Instead, it apparently inspired dismissive racist jokes, and I... don't see how that flatters Gaim's design work. It would appear to be the very definition of damning with faint praise, in fact.
If the strawberry is rotten or under-ripe, no amount of chocolate will make it taste good.
Yeah, I don't agree in the slightest. There's any number of Rider projects with laughable narratives that are still pleasant enough to watch, because the design work was excellent and that helped make sure the stunt and FX teams could make their half of the show enjoyable even when the script writers were failing. That's because the designs are the strawberry, and the narrative is the chocolate. That's why Bandai does the design work first, before anything else, before they even hire a writer, and the narrative is built well after the designs are done. Bandai does not put the cart before the horse in this regard. Some producers are just too willing to sign off on whatever Bandai shows them.
To further clarify my point with an example: I hate the design aesthetic of post-TOS Star Trek. It's sterile, unflattering, monotonous, cheap, and frankly, straight-up uglytown. But I still love TNG and DS9 -- because I get so invested in the well-told narratives that I forget, or ignore, how ugly I find everything else.
I am glad you enjoy well-told narratives like "Code of Honor," "Sub Rosa," "Profit and Lace," and "Let He Who is Without Sin..."
But I think it's still too early to determine if the designs, which a lot of people love, will kill Gaim.
Let's make one thing clear: I don't think the designs, even though there's some real stinkers in the line, will "kill" Gaim in any meaningful way. The quality of the design work in Rider rarely affects the franchise's bottom line, since the target audience is kids 3-6. Kids are not exactly discriminating connoisseurs. The main thing that will keep kids away is if the toy engineering sucks so the toys aren't fun, or if Bandai really drops the ball on marketing. Both are things that have happened before. Rider can be a big hit without good storytelling, or even any coherent story at all. So what I'm talking about here isn't any sort of financial success.
I'm talking about, basically, how well I think the designs allow the director to pay off Urobuchi's set-ups with memorable action scenes. I mean, that's what Rider's format boils down to: Urobuchi writes the drama portion of the show to build tension and interest in the action portion of the show, which the action director and episode director oversee. The episode's final fight is the climax of that portion of narrative.
Setting aside the matter of subjective aesthetics, I do think the designs actively damage the action portion of the show, by restricting what the action director and stunt actors can meaningfully have the main character do. I don't think it's a coincidence that Pineapple Arms got rolled out for use in a "fight" that was mostly Seiji Takaiwa gesturing unconvincingly at a "monster" that was added via green screen later. I think we'll see design flaws in the suits probably driving a lot of the action and stunt decisions in Gaim, and that's usually not to a show's benefit. It means the stories will build toward climaxes that can end up feeling a bit too arbitrary, and ultimately, those climaxes might not string together in any sort of logical way.