No, they're not really raccoons, though that is how the movie translates it since the actual animal is unfamiliar to Americans for the most part.
The actual animal is a tanuki, a canine species that looks like a cross between a badger and a raccoon. They really do have large testicles and the anology with raccoons is pretty good because the tanuki have formed a similar tolerance for surviving in human inhabited areas. Here's a picture (of the animal, not the testicals):
What is funny is that the name of the movie
Pom Poko is an onomatopoeia (Japanese is full of them) for the sound of the animals using their testicals (or rotund stomachs in less lowbrow versions) as drums. These are also the statues you see near the door of many Japanese restaurants.