Although IMDb indicates that Warner Brothers pulled this one from circulation because of the way it portrayed Indians, it IS available from at least two sources--as an extra with "The Maltese Falcon" (1941) as well as on "Warner Bros. Home Entertainment Academy Award-Nominated Animation: Cinema Favorites" (which is how I saw it).
The film is pretty much like a Bugs Bunny and Elmer Fudd cartoon except that instead of Elmer, you have a cute American Indian character that is a lot like Elmer. Whether folks actually find this offensive, I have no idea at all. However, ALL of Bugs' foils look stupid--so I don't think Looney Tunes was singling out Indians.
This cartoon, by the way, marks the second year in a row that this brand-new character, Bugs, was nominated for an Academy Award. Previously he was nominated for "A Wild Hare". And, like "A Wild Hare", the animation in "Hiawatha's Rabbit Hunt" is exquisite--much nicer than the later Bugs cartoons.