Hahah I hate that one too!!
I have a good friend who purposefully says 'excuse the pun' when there isn't a pun. He likes to see people confused as they try and work it out.
I agree, apart from my uncle, who explained it to me decades ago, I've only ever heard it as a compliment. I'm fairly sure it was not originally intended as such. Although I think the battle is lost on this one (as it is on 'begging the question')
I don't think it's supposed to be a compliment, although I think you're right that it's used like that now. I always took it to mean that someone looked pure, or cute, or cool whatever, but actually were fake.
I saw this thread just now and the first thing I did is check for this. It infuriates me for some reason and on the rare occasion I hear someone say it (a few of the grads in our office use the phrase!) I can't help but publicly lambast them. There is getting a phrase muddled, and then there...