I think the appearance of the characters in Japanese games aren't a result of ethnic "bleaching" so much - at least one would hope that's not the intention. Having characters who are racially ambiguous makes it easier for people of anything ethnicity or cultural background to relate to the character. And it helps each character look different. I don't think I'd be exaggerating to say that some people would have trouble distinguishing between characters if they all had, to quote the article, straight black hair and brown eyes.
Besides, is it typical of most people who fall under the broad umbrella of "Caucasian" to have hair colours such as purple, or bright orange? It's not necessarily whitewashing, in this respect, because they don't even look all that Caucasian. I don't look at an anime girl with blue hair, and think that she looks white. Sure, their eyes might be unnaturally large, and they might have curly hair, but those things still don't make me automatically assume that they're Caucasian. And as stated in the article, there are reasons behind that - to give the impression that a character is innocent, or naive - little things like that. We get these cues from their expressions and their facial features, and that's what they represent - not race.
And if characters appear "ethnically neutral" and makes the game more accessible, how is that a bad thing? Games that just so happen to be made by Japanese developers don't have to be about Japan. Look at all the RPGs that are set in fantasy worlds. So now all the characters in this fantasy world should look Japanese just for the sake of it? They did intend for people of other cultures to play it too, right? And if we really wanted a game which was more focused on Japanese culture, there'd be one. And maybe it'd be actually set in Japan, instead of in some world created by Japanese designers.
And whitewashing? Most of the Japanese/Chinese/Korean people I know, especially the girls, are paler than most Caucasians are. There is a whole market out there dedicated to making your skin more pale.
Also, people with no face really creep me out. Reminds me of that Doctor Who episode ... ugh.
I was under the impression that anime characters were designed the way they were to better display emotion and to distinguish character archtypes and personalities. Wide, round eyes typically are indicative of youth, benevolence and/ or innocence and naiveté, as seen with the "moe" archtype, while narrower eyes belong to adults and/or the evil and corrupt. There's more to it than that but that's the basic idea.