The message is "We watched Lord of the Rings and Game of Thrones and liked the medieval aesthetic enough to emulate it."

remind me of the bit of lord of the rings where muscular horses dominate European peasant men, as per the prompt translation.

Yes, in those movies, the hot white guys (and sometimes girls) usually ride on top of the muscular horses. So when you want to show a horse riding a man as a visual gag, why not make the man a hot white guy with a gruff beard?

You act as though they first decided to make an image representing Westerners and then chose that particular scene as an intentional insult, but you need to consider that they likely made thousands of test images, most of which were just playing around with the model's capabilities and not specifically crafted for the announcement post.

So why did this one get picked? I think it boils down to the visual gag being funny and the movie-like quality.

Racial/cultural tension is part of the context in which this image is appearing. Not only because of historical tensions, but because this image appears as part of this generation's Manhattan Project style arms race toward AGI and global dominance. Your denial of that is a reflection of your own ignorance.

If it was a an elf, knight or some sort of fantasy warrior sure with a comedic prompt sure, That is not the case. If you translate the prompt as people have here, you can see what was typed in,'Subdued white man' under 'muscular horse'. Who is the mare in the picture or even the gelding. If I was to do the visual gag it would be a knight or a a warrior not a peasant, there a no peasants in lord of the rings and very few medieval fantasy has peasant of any kind.