Well, it's hard to say without knowing the particular news story. Racial slurs can vary greatly and could be something deeply offensive and discriminatory based on stereotypes or biases.
No. Given the rather odd and not - so - common naming, it's highly unlikely to be a popular fanfic. Popular fanfics usually have more accessible and mainstream - friendly names.
Since we don't have much information about this 'percy destroys tiny cunt fanfic', it could be a really out - there idea from a small group of fans. It might be inspired by a book, movie, or game where Percy is a character. The 'destroys' part implies some sort of action or plot point, and 'tiny cunt' could be a very strange or specific object, place, or idea within the fanfic world. Maybe it's a play on words or has some deep - seated meaning within the fan community that created it.
The phrase contains inappropriate and vulgar language. If we assume 'Harry' is a character name, it seems to be about a situation where this Harry is involved in some sort of destruction related to a fan - created fictional work, but the use of 'tight cunt' is unacceptable in proper language.