A majority of the racist products featured in the film's fake commercials are real racist products from American history.
The footage of the "JBU terrorist attack" was actually news reel footage from when a B-25 bomber accidentally crashed into the Empire State Building.
The reason San Francisco was chosen as the place the audience watches the "documentary" was because the filmmakers wanted the irony of portraying a traditionally ultra-liberal city in the ultra-conservative Confederacy.