Recreational Outrage. It’s the internet version of rubbernecking.
Ah, thanks.
You’ve been here eight years and you* just now *thought to ask about RO?
Note that it’s just one of the terms listed in the Beginner’s Guide to Glossary of Terms on Straight Dope Message Boards thread. If there’s something you don’t recognize, you can always check there.
A perfect, if trivial example, of RO. 
(Can’t you almost hear the “…you dumbass?”)
Yes.
No. This seems completely off to me. “Caucasian” in modern parlance is effectively a synonym for “white”, and Indians are not generally considered white.
Come visit Memphis and attend my sister’s church if you feel nostalgic.
In U.S. English, “Asian” refers specifically to people from the *eastern/northern *parts of Asia: China, Japan, Korea, etc. I understand it’s different in the U.K.–if you’re from there, that may be the source of the confusion.
You would be correct that people from India aren’t European, but they *are *Caucasian, in the old parlance (which really isn’t used any more–the “Asian” groups above would be termed Mongoloid or Mongolic). These two terms are *not *always interchangeable.