That's how I approached it. After reading the original concept I reckon the Selay makeup would have been better for the Ligonians.Code of Honor suffers from casting. If you read the transcript without knowing the actual visuals, there is nothing racist detectable. If they'd made the Ligonians multi ethnic or even aliens in heavy make up (like lizards or something), there would not be this negative stench about the episode.
The guys on Mission Log did a great dissection of this troubled episode
https://www.missionlogpodcast.com/code-of-honor/
If they had done ten planets of all black people and this was the only one with assholes then it wouldn't look so bad but on it's own it kinda sucks, especially when you put it against the "peaceful" all white "Justice" planet, which also had a much more interesting original concept.
I just remember there being some really interesting dialogue with Troi and Picard about the Prime Directive and I felt Troi was actually used well in being kind of like a cultural officer.