The word problematic is kind of weasely used this way. The pen name had an in-universe rationale that made sense and was funny because of the incongruity. Merely alluding to the existence of ethnicity isn't "problematic" in itself.

If he was still using the pseudonym and making excuses to keep using it, sure, but I’m of the opinion that once someone understands what they have done wrong and took the opportunity to learn from it and do better there is no more wrong doing. There are, of course, exceptions to this, but a pseudonym that someone came up with in their 20’s and had the wherewithal later to say, “That’s not ok, I need to stop doing that” and stopped doing that for the right reasons is pretty far from a reason to call them problematic, especially when it wasn’t a decision made under any form of duress and he has made no attempt at defending his choice to have used that pseudonym and stated it was not ok for him to have used that pseudonym.

Edit: Also, it was used in a narrative context of the main character trying to throw off his identity, if They’re looking for David Wong then they wouldn't assume it’s the burnt out white dude.

Stolen valor refers to the act of falsely claiming military service or awards that one did not earn, often to gain respect, money, or other benefits.

?

How does being or not being Asian plays into this?

Mocking Germans is okay but using a traditionally Chinese name isn't?