This is a great question and I appreciate you asking it. It shows that you respect and appreciate Native culture.
Being from the Southwest (Zuni Pueblo, NM), I often saw Native designs displayed in various ways by Native and non-Native people.
As we move forward as a society, we are starting conversations with great questions like the ones you’re asking. What was once okay or seen as normal can shift as we start to learn more about ourselves and other cultures. What was accepted by our parents and elders may no longer be acceptable to the younger generations as we move further away from our colonial past. This is a good thing.
The word ‘racist’ is loaded with emotion based on people’s experience with it. The term means something different to every single person, which is probably why there is such a hot debate within your family.
Think about what you are comfortable with. If it makes you uneasy and doesn’t sit right with you, go with your gut. You don’t have to define it as anything, you can just say it ‘doesn’t feel right’.
Just for your reference, cultural appropriation is the exploitation of religious, cultural traditions, fashion, symbols, language, and music, usually by someone of the dominant culture. That means if someone is using someone else’s culture to their advantage or gain.
Hope this helps! Good luck with the hot debate and let us know what comes of it!
Best of luck!