There is something unnerving, almost neurotic, about watching a play with the house lights up, when the performers can see the audience, and the audience can watch itself. (At least it is for this critic, who thinks it only polite to keep his note-taking inconspicuous, which becomes impossible when the audience is part of the scenery.) But some plays inflict their best damage at close quarters.

Pony World's pressure cooker of a play with its impressively long title—We Are Proud to Present a Presentation About the Herero of Namibia, Formerly Known as Southwest Africa, from the German Sudwestafrika, Between the Years of 1884–1915—is a case in point. Consider this moment, roughly halfway through the production: Playwright Jackie Sibblies Drury has dropped us into a rehearsal room with a multiethnic theater ensemble (one black woman, one white woman, two black men, two white men) as they try improv exercises to help them develop a show about the Herero, an African people who were nearly exterminated by German colonists in what is considered the first genocide of the 20th century.

This is, of course, a blueprint for catastrophe. After a moment of tension, the black woman—who also seems to be the ensemble's de facto director—tries to redirect the energy in the room by giving an impassioned speech about a photograph of a Herero woman she found in an issue of National Geographic. "It was," she concludes, "like I was having a conversation with my grandmother."

The white woman immediately hunches over to improv the black woman's grandmother. As the stage directions say: "It's not okay."

"Oooooh, chil'," the white woman says. "Oh hell no," says one of the black actors, but the ensemble keeps going—white actors trading off the grandma character and talking about cornbread in a painful attempt at patois. "My grandma wouldn't have said that," the black woman says, nearly losing her control of the room (and herself) for the first time. "You ain't never met me, girl," scolds a white actor. As you might imagine, things quickly go to shit.

But at that moment, the expressions of the audience members—roughly 35 people in the tiny New City Theater—were nearly as compelling as the performances. The crowd was mostly white but not exclusively so, and their faces ranged from gape-mouthed horror to puckered revulsion to red-faced embarrassment. The play was making us squirm, and Pony World Theatre (especially set designer Suzi Tucker and lighting designer Angelo Domitri) was making us watch ourselves squirm.

We Are Proud is an especially piercing show for this moment—over the past eight months, the Seattle theater community has been having an unusually intense conversation with itself about race. This summer, for the first time in its 60-year history, the Seattle Gilbert and Sullivan Society faced strong pushback for its "yellowface" production of The Mikado, which featured no Asian actors. (That story went national, with CNN, NBC, and the Wall Street Journal wading into the controversy.) A production of Othello starring a non–African American actor—whose father was from India and whose mother was an enrolled Chippewa—kicked off a vigorous discussion about how lighter-skinned people have access to a greater range of roles while darker-skinned people are usually only tapped to play "racialized" ones. And the announcement that John Langs—a respected director among fringe and big-house artists—would take over ACT Theatre prompted some questions about why the people leading the city's performance institutions, no matter how individually talented and well-meaning, are almost universally white men.

In that context, watching We Are Proud's self-satisfied, liberal white actors stumble all over delicate racial terrain—and watching their inability to stomach any criticism for doing so—is especially harrowing, and even more so with the lights up.

Directed by David Gassner, the ensemble manages to exhume moments of gallows comedy even while they tighten their squeeze on us. The chemistry is especially charged between G. To'mas Jones and Jason Sanford, the black male actors who are both allies and adversaries—the former is darker-skinned and more outwardly skeptical of the white actors, while the latter is more game about the goofball "process" but quick to bristle at any implication that he's not "black" enough.

We Are Proud is a meta-theatrical, highly self-aware play (after one improv exercise that leaves Jones's character on the floor, the black woman, played by Dedra Woods, says to the room: "Can we help Black Man up, people?"), but that only seems to amplify its force. Drury uses the petty power games of a rehearsal room to dramatize the life-and-death power struggles that resulted in 80 percent of a people being wiped out over four years. That contrast itself is a source of grim comedy. We Are Proud doesn't hide what it's manipulating to get its point across—like a magician who shows us how the trick is done, but still makes us gasp at the end.