While in its selling to a 'hip' audience it is portrayed as an ironic wink about how stupid stereotypes and exploitation are, it is in fact a movie that thrives on stereotypes and exploitation. It's a complicated dance meant to allow people to laugh at what amounts to blackface-style mocking of Eastern Europeans. Sure there are attempts to cover this up by catching Americans doing stupid things or displaying politically incorrect attitudes, but frankly that's still laughing AT rather than WITH. The fact that Cohen apparently chose to repeatedly humiliate and embarrass people (some of them pretty helpless) rather than hire actors or explain things to willing participants makes the whole thing rather ugly.
It is one thing to mock and humiliate the rich and powerful, as Cohen did on the Ali G. show. It is another for a rich comedian to do so to some of the poorest people on the planet. And once he has done that, his mocking of Southerners, New Yorkers, and other not-so-defenseless people looks less like exposing the ridiculousness of our culture and more like something smug and ugly.