I don't doubt that this is probably the correct spelling of the word. However, anyone who has not lived in Hawaii for a while, or has seen the movie North Shore, might be misled by the spelling. I grew up in Hawaii and still had to sound out that-guy's spelling to convince myself. For those of you who have not already followed a softlink out of boredom, and have been able to hold onto whatever interest I was able to incite with this writeup, you can spell it phonetically as haole-remember that all vowels are short.
Also, regarding that-guys writeup: Haole is definitely used as an insult, but it is generally aimed at caucasians in the islands.