The answer to this and other Norton-related questions can be found at The Emperor Norton Trust.
First, the story of the prayer comes from a 1939 book by a man named Ryder. The Trust believes that the 1939 book may be exaggerating an incident reported in period newspapers.
[W]e believe we have found the first document that stands to lift key elements of the Lord’s Prayer story out of the realm of legend and into the realm of history. We are pleased to share it below.
If, as seems likely, an incident reported in the San Francisco Examiner on Tuesday 30 April 1878 is the basis for Ryder’s romanticized account, then what actually happened is both less and — in certain respects — more heroic than has been understood.
The newspaper reports on an anti-Chinese meeting which Norton interrupted. It reports:
The fun commenced by Emperor Norton I mounting a bench and by virtue of his sovereign authority commanding the dispersion of the assemblage. He was ordered by [General] Kearney[, the leader of the group] to step down, but declined to do so, denying the authority of the General to direct his movements. The authority of the General, being sustained by the assemblage, the Emperor subsided.
Kearney did not riot that day, but as the Trust points out in their article, Emperor Norton did directly confront the anti-Chinese assembly and told them that Kearney was illegitimate and that they should cease the meeting and return to their homes.
This shows that Emperor Norton did, apparently, attack racists to their face. It is possible that the prayer incident also happened and was not reported at the time, although this seems unlikely because Emperor Norton stories sold papers.