The horror of their culture is intentionally a jab at hyper-liberalism, and how hyper-tolerance of personal preference and pleasure is bad.
Their culture would not have any problem with LGBT(other) gender or sexual identities-- it would embrace them, and want to experience them all. It has no problems with odd political views, as long as they do not endanger the state. Etc.
To them, the torture of slaves is no different than cock-fighting, or other low-brow forms of public entertainment and spectacle-- in fact, it is strongly implied that their intellectual faculties are at once deteriorating from lack of stimulus, and also having reached max saturation in the sciences in the past. (EG, they hit upon the real nature of reality, and then-- whoop, we ran out of stuff to study. What do we do now? Guess we have to start doing away with ethics in order to keep satisfying our curiosity.) As such, low-brow entertainment is the most creative venue available. Compare with the horrible drek we have on daytime TV, and the depravity that people put themselves through.
Science had been profound and accurate, and all-embracing save in the one direction of astronomy. Of late, however, it was falling into decay, as people found it increasingly useless to tax their minds by recalling its maddening infinitude of details and ramifications. It was thought more sensible to abandon the deepest speculations and to confine philosophy to conventional forms. Technology, of course, could be carried on by rule of thumb. History was more and more neglected, but exact and copious chronicles of the past existed in the libraries. It was still an interesting subject, and there would be a vast number to rejoice at the fresh outer-world knowledge brought in by Zamacona. In general, though, the modern tendency was to feel rather than to think; so that men were now more highly esteemed for inventing new diversions than for preserving old facts or pushing back the frontier of cosmic mystery.
Essentially, they were themselves degenerating into becoming more and more like their slave caste, because the intellectuals had stopped being intellectual-- there was nothing left to really discuss.
I would not be at all surprised if the origin of the Colosseum mentioned, started as Reality TV's analog, as the age of idiocracy unfolded, and that now it was the mainstay staple of entertainment as the culture continued to slide into intellectual oblivion.
The important take away here, is that the subhumans were natural evolutions, not really the result of purposeful directed selection. The more intelligent people aggregated together in one end of society, and the dullards in the other, and nature did the rest. Nature is not idle, and with the lack of natural selection pressure, was returning to a less specialized form for the species.
This extensive slave-class was highly composite, being bred from ancient conquered enemies, from outer-world stragglers, from dead bodies curiously galvanised into effectiveness, and from the naturally inferior members of the ruling race of Tsath.
You will also note, from the text concerning the man-animals, that the "hideous white flabby things" are likely the result of natural interbreeding between "Idiots" and previously engineered lifeforms created by a different race entirely. (that different race being now the antecedents of the modern man-cattle that had been roaming the countryside.)
And yet he could not refrain from crying out in terror at what he saw when he passed through the great vine-draped pylons and emerged upon the ancient road. He did not wonder that the curious Wichita had fled in panic, and had to close his eyes a moment to retain his sanity. It is unfortunate that some sense of pious reticence prevented him from describing fully in his manuscript the nameless sight he saw. As it is, he merely hinted at the shocking morbidity of these great floundering white things, with black fur on their backs, a rudimentary horn in the centre of their foreheads, and an unmistakable trace of human or anthropoid blood in their flat-nosed, bulging-lipped faces. They were, he declared later in his manuscript, the most terrible objective entities he ever saw in his life, either in K’n-yan or in the outer world. And the specific quality of their supreme terror was something apart from any easily recognisable or describable feature. The main trouble was that they were not wholly products of Nature.
The party observed Zamacona’s fright, and hastened to reassure him as much as possible. The beasts or gyaa-yothn, they explained, surely were curious things; but were really very harmless. The flesh they ate was not that of intelligent people of the master-race, but merely that of a special slave-class which had for the most part ceased to be thoroughly human, and which indeed was the principal meat stock of K’n-yan. They—or their principal ancestral element—had first been found in a wild state amidst the Cyclopean ruins of the deserted red-litten world of Yoth which lay below the blue-litten world of K’n-yan. That part of them was human, seemed quite clear; but men of science could never decide whether they were actually the descendants of the bygone entities who had lived and reigned in the strange ruins. The chief ground for such a supposition was the well-known fact that the vanished inhabitants of Yoth had been quadrupedal. This much was known from the very few manuscripts and carvings found in the vaults of Zin, beneath the largest ruined city of Yoth. But it was also known from these manuscripts that the beings of Yoth had possessed the art of synthetically creating life, and had made and destroyed several efficiently designed races of industrial and transportational animals in the course of their history—to say nothing of concocting all manner of fantastic living shapes for the sake of amusement and new sensations during the long period of decadence. The beings of Yoth had undoubtedly been reptilian in affiliations, and most physiologists of Tsath agreed that the present beasts had been very much inclined toward reptilianism before they had been crossed with the mammal slave-class of K’n-yan.
One could compare the torture and dismemberment of the slave class in the arena with the depictions of zombie hoardes getting shot with shotguns in "zombie apocalypse" media.
The creation of this slave class was not purposeful. That is a very important take away.
CP:
Again, the "is a black man" is intended to be an analogy! GAWD SAKE people.