He should have left it at the '50 years ago...' comment, or used any number of racial lines that would have been both edgy and humourous in the context of black guys heckling him based on his race. But he became genuinely angry and went for the jugular in a way that was devoid of any humour, even in a tasteless sense.
The fact of the matter is that Michael Richards is really not a good stand-up artist, so he had no clue how to handle himself in that situation. Almost any good comedian could have handled that better and ended up on top. But this is a guy who manages himself, and is known for being very difficult to work with. He turned down Monk, for god's sake, because of an argument.
And I hated Kramer.