The message is that Indians were more uncivilized than white men to deserve this level of retribution. The barman's diatribe against an Indian attacker ignores the Indian's probable cause and therefore makes him look beastly. Without context, the Indian comes off as a predatory animal, not a human. Perhaps more important, attacks against whites were rare, yet the joke makes it seem as if they were the norm. If you tell enough jokes about Clinton's lust for interns or Gore's wooden posture, people will conclude these attributes are true also even if they get the humor.
Repetition breeds acceptance and assimilation of such claims.
The punchline reinforces all of the above notions. Red is the color of bloodlust and murder. In the 19th century, I think 5,000 Indians rarely gathered in one place at one time. Perhaps at the Medicine Lodge Creek peace conference in 1867, or when the Army corralled the Navajo in the Bosque Redondo concentration camp , but not to make war. That exaggerated number makes a gathering of that size look normal, as if Indians were a ravening horde of animals, a veritable wolfpack.