Yeah, I don't know if tail and ear snipping are unethical - lots of owners do that, but I have to admit that I'm not sure how the procedure is done. Neutering might fall into this category (If I had to chose between the two for me personally, I'd take ear snipping in a heartbeat), but that's generally promoted.
I pulled some info on this event from PETA's website:
The PETA Files: KKKrazy Protest Outside Westminster
The web page doesn't offer much in explanation for the event, but the leaflets suggest one of your points - breeding causes dalmatians to be deaf and pugs have a hard time breathing. I dunno, seems like a stretch - I'd like to hear the breeders side of this story before making any conclusions.
They do add that breeding purebreds causes a random mutt somewhere to not get adopted which is a far, far stretch for marching with KKK garb IMO.
Still looks like media whoring to me so far.