My opinion on the whole Nazi issue is that yes it can be offensive to have an empire based on that regime, but in an open & free society the solution is not to censor such things, for not only does it go against the very values of such a society, suppression only lends power, and generates interest, in the very thing you are trying to censor. If it was a powerless idea/image/idealogy, theoretically there would be no need to suppress it. In trying so stridently to avoid offending anyone, we tend to want to avoid speaking of evil things that have happened in human history, but to sweep it under the rug or ignore it usually has the opposite effect. The best way to avoid similar things happening in the future is to study and confront such evil.
Back to the original issue about the empire... To put things in context a little bit. My ancestry is half Polish, and the Nazis took a very heavy toll on that country. I know that some of my more distant relatives perished during WWII under their yoke, so I do have some personal investment in the question. I would not find the existence of a Nazi Empire in the metaverse to be too offensive to let it exist, partially because its a game and people play evil empires all the time, albeit fictional ones. But I would never join such an empire, nor encourage anyone else to do so. If someone really wanted to form one then I'd let them be, but they better be prepared to take a lot of crap from many people.
Sentient species taste better...
