Actually, I haven't seen that.
Don't get me wrong, he's praising some people who DO (and DID) say that, but I haven't seen him anywhere say that we'd be better off with segregation. (Which is why I was surprised by his wimpish apology.)
He's written briefs to the Courts supporting school discriminatory policies. (While I disagree with his conclusion, he had valid arguments.)
He's also written one (iirc) on the burning of crosses. (Which, strickly speaking, I also agree with him, it should be covered as a free speech - provided it's done on my own property and it's my own cross. :-)
There is even an argument that he's a member of the cofcc...but that he didn't pay the dues (and may not have known about the membership) - as it was done through an uncle of his.
Frankly, I have no ax to grind with Lott. I think he's statement of Thurmond were over the top and I think he should've apologized better. (Bush's statement should've been the one he made).
But I do have doubts that he's really a racist. (But I could be wrong.)