Personally, the game seems mediocre. Personally, I also believe it's in bad taste.
However, it was apparently playable enough to pass judgment, earning the right to remain. Also, neither my opinion nor that of any other individual should hold enough weight to decide the viability of someone else's form of expression, no matter how gross or grotesque, if it doesn't directly impinge upon the rights of others.
That said, the choice to create was PiGPEN's. As with any decision, there could be repercussions. He accepted responsibility for whatever came when the game was submitted for public consumption. Newgrounds is simply a showcase; when offensive art is placed in a gallery, it's the artist who catches flak (usually, and rightfully so), not the gallery. Websites such as Newgrounds should be treated no differently than any other exhibitor of any other form of media.
In short: let it stay.