Extremely slanted eyes is an ugly characterization of Chinese people. It's the equivalent of putting fake hair all over your arms and face in order to exaggerate how hairy Indian people are if the Olympics were being held there.
Does Yao really deserve to carry the flag? He's never won a medal in the Olympics, and he hasn't exactly had much success in the NBA in terms of playoff wins or championships. It seems like China just wants him to be the torch bearer because he is the most recognizable figure--in other words--China just wants to show off. I know this is a Yao Ming fan site, but it seems like there are other Chinese athletes who are more deserving of carrying the torch.
Although it's an honor, I'm actually disappointed if Yao is indeed the flag bearer because he's already done it (in 2004), and there are other people who are "just as" worthy, not "more" as you phrased it, except maybe Liu Xiang. But something tells me he's going to be doing something more important on Friday night than carrying the flag.
NBA playoff wins or championships don't have anything to do with it. China is one of the top teams in Asia, if not the best. And Yao Ming is unquestionably one of the best centers in the NBA. So it's not "showing off."