Not sure if anyone else has run into this, but since I had a skin declined for being objectionable, I thought it might help to have some discussion on the matter. I don't recall any previous discussions (beyond whether swastikas were allowable or not, and that issue has been clearly settled in my mind anyway).
The skin in question is George Laven's "Itsy Bitsy II", and the offensive nature of it should be obvious from the inset in the lower left corner of the screenshot below:

Close inspection reveals that the hand is actually facing palm out, which is a pretty goofy way to flip someone the bird but I think the meaning of the gesture still comes across.
I'm a poor judge because there is very little WWII era noseart that I find offensive. Its all just history to me - these were young men in life and death situations and I consider the risque artwork to be a way to blow off steam. Skuzzy's email said the skin could be approved if I removed the finger and changed it into a fist, which I started to do, but didn't feel right about. That young pilot painted that image on his plane and then risked his life and limb in it for his country. I couldn't bring myself to knowingly misrepresent his aircraft just so I could have another skin in the game. As a skinner I take pains to make as accurate a representation of my subject as possible.
How do you guys feel about offensive skins, and 'toning' them down to make them acceptable?
After some research, I found some other skins which I think HTC might find objectionable:
Phillip Goldstein's "Jew Boy", which could be interpreted as a racial or religious slur:

Or "Big bellybutton Bird II", with its obvious profanity:

And maybe some figures of completely naked women are unacceptable as well, e.g. the large scale reclining nude on the P-39 "Air-a-Cutie":

(Assuming we get a P-39 someday

) Though I think Kev367 has Spitfire in game that does depict a naked woman.
I never really thought about it before, but I've decided my feeling is its better to be true to the skin than to revise it for the game's sake. If that means it's too offensive to put in the game, then so be it.
PS - this is a real disappointment for me, as I believe its possible I'm related (though distantly) to the pilot. Also the unusual locations of the black patches on the nacelles and the black nose make it a very distinctive P-38. I've never seen this scheme before. It really grew on me as I worked on it, which is probably why I never thought about whether it would be too offensive for the game. From what I learned of the pilot through email conversations with his nephew, he is probably just as happy now knowing his paint job is still getting people in trouble!
All.