I studied this in depth at A-level psycology. It is a facinating study actually, and it contradicts another study so brilliantly, if i can find my paper ill post it up.
Basically zimbardo's study couldn't be seen as legitimate due to the participants knowing it wasn't real, and there were too many variables to consider it truely scientific.
Zimbardo's study has many criticisms, one of the foremost being that he participated in it himself by taking on the role of a wardon. It does, however, prove something brilliant: People take on the roles that they're given, including Zimbardo, since he was so involved and so willing to turn a blind eye to what was happening.
And my personal view is that the fact the participants knew it was fake further increases the impact of the results as it proves how horrible people can be, regardless. They knew it was fake, they knew their rights as a participant, they knew they could boycott the experiment at any time, and yet they still performed acts not so dissimilar to torture. So much so that many of the 'prisoners' had to undergo therapy.
I think further testiment to the impact of the study is how it came to a close. Zimbardo himself was happy to continue, it was only when his girlfriend of the time came in and observed what was happening that it came to a halt. (This is legend, but regardless, it's still supportive)
Point being, you say that the public will not allow such racist regimes to take place, but a bit of propaganda, a bit of prejudice and some clever role allocation and it suddenly becomes a reality. I think Nazi Germany is a testament to that.
It also contradicts the other studies showing in WWII it was something like less than 30% of all soldiers actually aimed to kill (i cant remember the exact figure). And these people were told by a man in a suit to kill the enemy
I think the main difference between this and Milgram is the proximity of the victim. Milgram performed many follow up studies to assess why people would obey even the cruellest of orders, and he found several important contributing factors, two of which being proximity and levels of cruelty (not the technical term, but correct none-the-less.)
In the Milgram study, Pp's weren't able to see their victim. I'm guessing in the study you're quoting tha they were able to see their victim.
In the Milgram Study, Pp's gave out doses of their cruelty in increasing increments. He didn't ask them to kill them straight out, he gave them a reason to do it (Answering a question wrong) and a platform for people to increase the voltage wit each incorrect answer.
Without those two factors, it is true that people are less willing to kill another human being. But the point still stands, you shouldn;t underestimate Joe Public. They're still capable of being cruel and turning a blind eye.