Simply idiotic. It's a cartoon, a caricature. There's nothing more or less racist about it than the Notre Dame Fighting Irishman or the Padre's swinging monk. The name itself is a tribute to the first Native player on the team (and in major pro baseball I believe), who was so good and domineering in his time that they named the latter incarnation of the team after his old nickname. I for one am definitely picking up a few Wahoo caps before they disappear. Haven't had one since the early 90s.
Caricature is why it's a problem. Caricature's are by their definitions stereotypes, and are offensive in the context of groups who have been historically discriminated against. For the most part, the brunt of the criticism against the Indians has been towards Chief Wahoo and not the name. Part of that comes form the fact that in the US, "Indian" is very commonly an accepted term used by indigenous communities in the United States (in Canada, not so much, where aboriginal or indigenous are the accepted terms). So I can get the argument to keep it, and I imagine like the Blackhawks, attention is going to not be on Cleveland after this logo is dropped.
Chief Wahoo on the other hand wasn't meant to honour anyone. It's a stereotype of a people that were disadvantaged and discriminated upon when the logo was created, and it's a stereotype of a people that are disadvantage and discriminated upon today. That is the key difference (but certainly not the only one) between Chief and the Fighting Irishman. While Irish have been historically discriminated upon in the US (mostly because they were Catholic), they weren't when the name was conceived, and it was created by a Catholic university with strong Irish roots, either to honour Irish-American soldiers or Irish freedom fighters back in Ireland. Big difference from a bunch of old white guys saying it was to honour Native Americans, but receiving no input from them.
The Monk isn't comparable because it's not a people, it's a profession.