Correct me if I'm wrong, but it's a reference to a subculture, not an ethnicity. Though most cholos are probably hispanic, being a 'cholo' isn't down to your racial genetics, it's a subculture.
Cabron! That wiki page clearly states ("gangster" in Mexico). It is a stereotype we use all the time and have no issues with. Same as you using "white men" to describe, I don't know, caucasians? I don't feel offended by it and so shouldn't you on behalf of "mexican looking latino americanos who commit crimes".
Not really the same thing, I think. Though one could certainly note with some interest how all common slurs equating white ethnicities with crime have fallen out of style. In the 1920's I'm sure we'd have had all kinds of ways to call someone an Irish criminal or whatever.
The only one I can even think of is if you called some vaguely Italian crook a goombah or Guido, and the first one would probably just confuse people who didn't watch a bunch of Mafia movies.
And I'm not offended by the usage, just the pretense that this racial term isn't a racial term. Not a huge fan of either intellectual dishonesty or just casual ignorance in general.
Might depend on the area but neither I nor any other Hispanic or Latino I know see cholo as a racial insult or slur (granted I'm a tiny sample size). It's more of a descriptor than anything in my experience.
At least as far as criminal law goes. However, I've heard of some pretty wacky situations where defending your home like this can result in some civil liability.