When Frank's and Charlie's muskets misfire, they think Sweet Dee has bewitched them. They visit the local Indians to reverse the imagined spell.
The scene switches to the interior of a tipi, where Frank and Charlie meet two Indians, a father and son. These Indians are shirtless with paint on their faces and arms. They have dark hair in braids but no feathers or headdresses. In short, they're generic but not particularly stereotypical.
The tipi is stereotypical, but at least the interior doesn't have dreamcatchers or crystals. The most prominent object is a hanging shield on which Frank bumps his head.
Frank and Charlie, who has brought a pumpkin, don't think the Indians can understand them. They speak candidly at first:
CHARLIE: Yeah, you think they'd have huge homes.
CHARLIE: What is the sleeping situation in here? You think this father and son are sleeping on the same bearskin together?
FRANK: Probably. Where else are they gonna sleep?
CHARLIE: What a bunch of losers!
FRANK: I'm telling ya, a bunch of inbred savages.
FATHER: I speak English.
CHARLIE: Ohhhh, shit. For real?
FRANK: Oh, that's not good. We didn't mean to--
CHARLIE: Our bad. So tell me, how much land are you gonna give away for a pumpkin these days?
FRANK: Whoa whoa whoa whoa whoa. Charlie, Charlie, listen. What we need is your magical powers to lift the curses from our guns.
CHARLIE [imitates firing a gun]: Ga-ga da boom.
FRANK: Okay? We're gonna pay you.
CHARLIE: Oh, yeah, we gotta, we gotta pay you--
FRANK [retrieving a bottle]: We'll give you this. We brought this for you.
CHARLIE: Right? Makes you feel good. Helps you sleep.
FRANK: Brings the tribe together.
SON: You want me to scalp them?
[The father smiles approvingly.]
FRANK: Oooh. Oh. That young Indian was fast with the tomahawk.
DEE: Yeah, he really lobbed a big hunk off your head up here.
FRANK: It's gonna make me look deformed.
CHARLIE: Yeah, you're gonna be deformed for the rest of your life.
FRANK: Give me that skunk pelt. I'll use it for hair.
FRANK [to Dee]: Don't push, don't push, don't push.
DEE: All right.
FRANK: Does it look cool?
CHARLIE: It looks pretty good!
It's a given that Frank and Charlie--indeed, all the main characters--are complete idiots who are totally insensitive to everyone and everything. That explains their initial comments about "losers" and "inbred savages," and their offer of firewater.
But beyond the guys' comments, the show implies several stereotypes. It puts the Indians in a stereotypical tipi, even though they live in southeastern Pennsylvania, not far from Delaware Bay and the Atlantic Ocean. It portrays tipi life as crowded and crude, even though tipis usually house more than four people. The son eschews diplomacy as a response to the Americans' insults. Scalping is his first and only suggestion, and he carries it out.
So the Indians' living conditions are uncivilized and their response to affronts is savage. The show tries to make the Americans look bad, and they do end up looking like fools. But the show still stereotypes the Indians too.
For more on the subject, see Tim Sampson in It's Always Sunny and TV Shows Featuring Indians.