J.E. Lighter, The Random House Dictionary of American Slang (1994) reports that the origin of bitching in a positive sense was student use:
bitching adj., ... 2. Stu. excellent, wonderful, exceptionally attractive. Also, bitchen.
[First two cited occurrences:] 1957 Kohner Gidget 10: It was a bitchen day too. The sun was out...in Southern California. 1962 English Jrnl. (May) 323: Bitchin' equivalent to neat or swell.
The instance in Frederick Kohner, Gidget (1957) reads in context this way:
I tried it. I was sort of desperate to write this story so I drove out to the main drag (I got my junior license only last week) all by myself, and I took that pencil and notebook along and was all set to begin at the beginning. I mean with the description of the place. It was a bitchen day, too. The sun was out and all that, even though it was near the end of November. But then, we are living in Southern California and if you wouldn't look at the calendar you'd hardly know the difference—honest!
Gidget is a surfer-girl novel, written by the real-life father of the original gidget (gidget, we learn, is a surfer palindrome for "girl midget"). A discussion of the book and of the California surfer subculture of 1957 in "Gidget Makes the Grade," in Life magazine (October 28, 1957) reveals another instance of bitchen in that subculture:
The book tells how Gidget learned the difficult art of surfboarding—catching the "bitchen wetbacks" (big waves) and "shooting the curls" (riding the surf) without "getting the ax" (falling under a breaker). An indomitable girl, Gidget finally masters the board.
I don't recall ever having encountered the term wetbacks except as an derisive (and offensive) name for braceros—unlicensed Mexican nationals who cross over the U.S.-Mexican border to pick crops and perform other hard labor in the United States. (The term wetback refers to their having supposedly crossed the border (illegally) by swimming across the Rio Grande, which forms the entire border between Texas and Mexico from Brownsville/Matamoros on the Gulf of Mexico to El Paso/Ciudad Juarez in far west Texas.
In any event, the positive sense of bitching can apply to bitch as well, as this glossary entry in "The Parlance of Hip," in Esquire, volume 52 (1959) indicates:
BITCH: something very good. Example: That song is beautiful. That musician has a bitchin' ear. Bitch also means girl or woman, but not in a derogatory sense. Example: I've got me a fine bitch.
The "not in a derogatory sense" language here may be intended to indicate that a a person using the term may not mean to convey the idea that the girl or woman so designated is unpleasant or unattractive in any way, but the notion that "bitch" is therefore not derogatory appears to be a relic of a particular (and peculiar) male view of the subject at the height of the Mad Men era.
And a glossary in the Saturday Evening Post, volume 234 (1961) has this entry for bitching, along with entries such as "like wow," "like cool, man," and "swinging":
bitching — joyous term, as in: "I had a bitching (or joyous) time."
Wentworth & Flexner, Dictionary of American Slang (1960) find an even earlier antecedent for bitching in a positive sense in bitchey:
bitchy, bitchey adj. 1 Having the attributes of a bitch. 2 Striking in appearance; classy. 1930: "A pearl-gray Stutz, a bitchey roadster, all right." J[ames] T. Farrell, 137. Some c1930 use.
The Farrell citation comes from a short story called "Looking 'Em Over" (1930).
It's not impossible that the use of bitchin' in 1950s surfer lingo directly recalls the early 1930s usage of bitchey in a similarly upbeat sense. But it may be even more likely that the adjective bitching (or its more elaborate sibling son-of-a-bitching), popularized by soldiers during World War II and the Korean War, provided the inspiration for the newly positive bitchin'. In any event, it seems truer to attribute its origin to the surf lingo of Southern California in the late 1950s than to student use, as Lighter unaccountably does after noting its early occurrence in Gidget.