A word like "engooden", for converting something from negative to positive

Solution 1:

Consider the following:

• Sublimate: transform (something) into a purer or idealized form
• Ennoble: lend greater dignity or nobility of character to
• Ethicize: to make ethical or endow with ethical qualities

Solution 2:

Also consider terms like the following:
• spin, “To present, describe, or interpret, or to introduce a bias or slant so as to give something a favorable or advantageous appearance.”
• varnish, “To gloss over a defect”
• gild, “To adorn” (ie to apply a thin layer of gold, making something that's base appear valuable; also see aurify)
• transmute, “To change, transform or convert one thing to another, or from one state or form to another. [eg] The alchemists tried to transmute base metals to gold. ”
• transubstantiate, “to change into another substance : transmute [eg] The novelist transubstantiated the joys and sorrows of his early years into a charming fable about childhood”

Solution 3:

As @Jay has said, in the example the OP has been given xxx doesn't change anything about racism, he just gives an opinion of it. So despite what the OP has been asked for, the process is not of changing a thing from bad to good, but a process of presenting a view of something which conflicts with the popular, but not universal, opinion of it.

In that light I would suggest the verb 'To Recast', defined in the OED (Sign in required) as

To give (a person, occupation, etc.) a new or different role or image; to reinvent or re-present as something different.