I actually had a couple of incidents while living in Japan... the first was a couple of people badmouthing us for being foreigners (Americans are so rude, loud, obnoxious, etc), so I went up to them, politely (yup, whipped out the 敬語) asked the time, then told them (again, oh-so-politely) that since you can never be sure of your audience, they might want to take care in the future to not speak poorly of people in their presence ;)
The other situation was even more amusing, if somewhat deplorable. A couple of friends and I were heading home on the last train after a night of karaoke, and a couple of American military guys got onto our train, apparently out to go clubbing in Shibuya. They were unfortunately drunk and completely obnoxious (and probably proving the stereotype to people like the above!) - shouting to each other, jumping around the train car (and landing on people!), generally being horribly rude. My friend and I were apologizing to the other passengers, for just being the same nationality as them! After a while, they started talking about us. I don't remember exactly what was being said, but someone said "Dude, they can hear you!" and the guy who'd been talking about us was like, "They don't speak English!" Now, my friend and I are both white as white can be, clearly not Asian by *any* stretch of imagination, so we just looked at each other and said, "umm... yes we do?"