Although not limited to non-white Mexicans, it is a very convinient P.C. euphemism that is mostly used in that manner.
When, for example, does the press ever use the word "Mexican" in their headlines about crime, poverty or school drop out rates?
When, for example, does a police report advise to be on the lookout for a 30 year old, 5'9", slender Mexican mestizo male?
If the police were out looking for a missing "13 year Hispanic girl", would they ever give a second look to my white, blond, blue-eyed daughter if they walked right past her?
We don't use cultural but non-physically descriptive terms such as "Catholic" or "Protestant" or "Republican" to describe individuals being sought by the police. However, "Hispanic" is used in that manner rountinely precisely because it has become the Politically Correct euphimism for Mestizo or Indio.
So, Hispania, one of the most ancient geographical names in European history, has had it's adjective co-opted to mean mestizo, indio, black, mulato or anything else except white. For example:
Marriage Among Unwed Mothers: Whites, Blacks and Hispanics Compared
I am not advocating the use of "Hispanic" in such a manner. I am protesting it.
Since Chicanos despise the term Hispanic because they feel it strips them of their Indian heritage, I would propose that the P.C. euphimism for mestizos be changed to something such as "MesoAmericans" which they can culturally embrace so that those of us with our 2000+ year-old roots in Hispania can get our proper name back.