Jacqueline, I don't think you are over-reacting because we all want our children to grow up to be good, considerate people, not rude jerks and you are just worried that his behavior could offend someone unintentionally.
Usually getting them to put themselves into someone else's shoes work but it seems that just went right over his head.
I agree with Bad Mama Jama to try to use books to help facilitate a conversation. It will help him to imagine himself really in someone else's shoes. I think the book "A Day for Vincent Chin
" by Jacqueline Turner Banks might be good. It's about a young Japanese American boy whose mother is working on the Vincent Chin case. Vincent Chin was a young man who was killed just because he was Asian. It's barely a hundred pages so he can finish it in a day or two.
I also think your son might benefit if he participated in programs/activities that are culturally Chinese or Korean or whatever ethnicity lives close to you. He has probably heard one of his friends say that phrase or they equate negativity with Chinatwon. But if you take him to the area he will see how wrong he was about Chinatown.