And is it a bad thing to let him know it is offensive? If he can't comprehend it naturally, maybe he can at least learn.

I guess you could make a case that people who are diagnosed to lie on the autistic spectrum should get a bit more leeway from the administration with regard to disciplinary action (because it's not really their fault), but what else are you gonna do? Give them a free pass? I don't think that even has much to do with the feared political correctness anymore.