Holocaust is used in other contexts, such as nuclear holocaust. I view the word apartheid in similar light; clearly associated with one particular case but still with the wider meaning. Ground Zero and D-Day are other examples.
If the segregation in the game is done right then I don't think there is any problem at all. I don't follow "especially not in video games" at all, why would video games be held to a different standard to other media?
People getting it the wrong way around are idiots and should not be pandered too.