What seems to be the common consensus amongst the average Australian is that 'I don't personally find it offensive, so it's not offensive'.
A good concise explanation as to why the common consensus is actually a FAIL one, from Mike Justice, a local MC who is of Australian and Afro-Caribbean descent.
I've been posting a few Pertinent Links on my twitter feed under the tags #HeyHeyKKK and #heyheyFAIL, but this one is a bit too long to tweet properly (ED: so I've tweeted it anyway). I've also been commenting here and there on LJ.
ED: Oh look! Another article rightfully slamming the show, followed by comments from outraged Aussies waaaaahing about their ignorant, clueless, bigotted white privilege being challenged! How Surprisement!