It's called Broken Windows theory. NYC is notorious for it.
http://en.wikipedia.org/wiki/Broken_windows_theory
Basically what it boils down to is the theory that
the way an area looks is a signal for crime. So yes, they do harass and profile people based on looks alone because the theory is that if you can get rid of the bums, thug looking people, etc etc and make the area look pristine, according to the theory it sends a message that the area is being watched and crime is not welcome.
In Broken Window theory it is often accepted to rough up anyone who doesn't fit in, and maybe even get them off the street on trumped up charges for the sole purpose of getting them out of view of the community.