When I visited the Middle East with my school, one of the lectures we heard was by an Arab historian who said the crusades were more racial than religious because Arabs fought with each other no matter what religion they were. Is this a fair assessment of that time?
No, this is generally false. Many native Christians served in the Crusader State armies (it was impossible for them to rely solely on European crusaders and immigrants), many European soldiers married native women, and the Crusader states even had an alliance with Damascus at one point (they still hated each other, but saw Nur-ad-Din as the greater enemy).
Even Saladin had an informal alliance with the County of Tripoli for a time, who shared political enemies (though this agreement had obviously collapsed by Hattin).
The idea that all the Arabs teamed up to fight the crusaders is simply false, and characterizing the conflict as racial makes very little sense because modern concepts of race generally did not exist at that time.
Source: A Concise History of The Crusades, by Thomas Madden