It's only because this was a family show that all they did was cut Grace's hair.
Robert E sings "Will the Circle Be Unbroken" which was written in 1907, after the time period in which the show is set.
The Klan was formed in 1865 in Tennessee. It spread to Georgia in 1915, and was not in Colorado until 1921.
Robert E sings the hymn Will the Circle Be Unbroken, but it was not written until 1907.
When the banker wants to foreclose on Dr. Mike's clinic, he shouldn't be able to because in "The Visitor" in season one Dr Mike got the money from her Mother. The bank was not involved at all.
The evil banker cannot blackmail Michaela with foreclosing her mortgage. She doesn't have one. She paid for the clinic building in full.