I've heard that this in "the last ship" and that sounded like a compliment.What do you say?
In the usage you described, the phrase "Bad Ass!" is an exclamation similar to "Awesome!", "Superb!", or "That's totally rad, brah!".
This is distinct from the usage of the term "badass" as a description of a person, such as in "Chuck Norris is a badass!", which is usually a form of legitimate praise connoting toughness, rugged independence, etc. However, the term can also be used sarcastically to demean someone, such as in "Look out, folks! We've got a badass over here!", which is commonly used in internet flame-wars against so-called "internet tough guys".
The positive meaning of "bad ass" or "badass" is derived from the somewhat dated slang usage of the word "bad", meaning "cool". For example, one might exclaim "That is one baaad ride, brother!" at the sight of one of these. Or, for another example, one might say "She's a bad mama jama!" to express that one finds a particular woman exceptionally attractive. Context is important, though, with this slang usage of the word "bad", as is the tone and inflection used when employing it in conversation. Since its usage has fallen out of favor as a go-to descriptor for all-things-exceptional, the term "bad" may be misinterpreted as a disparagement or criticism if not given the proper context or tone. The term "badass" is generally safer to use, mild vulgarity notwithstanding, as its meaning is not usually interpreted as negative.
Always positive. Although it's a combination of what sounds like two insults, I don't believe "badass" has ever had a negative meaning. The Online Etymology Dictionary traces its current meaning "tough guy" at least to the 1950s.
My observation is that using "bad" à la Michael Jackson to mean "cool" or "good" is extinct and has been for a couple decades, but "badass" is very common.
If you're talking to a donkey it would be a negative connotation as in "Bad ass! Do NOT eat the sofa!". Otherwise it is generally taken to be complimentary ("Dude, that was totally bad ass!") or referencing the perceived toughness of an individual ("That soldier is a total badass").
The often used negative to referring to an individual as a "bad ass" is usually just "an ass", or "a hard-ass" in the case of an individual who is tough on others.
I will only add to the above answers that, in addition to badass denoting a person (which, as has been noted, is always a compliment and denotes toughness, independence, and a general sense of "watch-out-for-this-guy"), the phrase badass move denotes a bold, decisive action, and by extension the word badass can be used as an adjective to describe anything or any action that has the qualities of a badass. "That's a real badass shirt" means "That's a very cool shirt."
You will even encounter the word "badassery" to refer to the quality of being a badass:
badassery. Syllabification: bad·ass·er·y. Pronunciation: /ˈbadˌasərē/. Noun, North American informal. Behavior, characteristics, or actions regarded as formidably impressive: few of us can attain her level of badassery.
I've been called a badass most of my adult life. I don't see it as a negative thing I see myself as being extremely independent very strong and I don't put up with bullshit. I'm not a Fufu kind of girl I'm a country girl and couldn't do girls get stuff handled. So no I see no problem with the word at all or being called one. My daughter loves the fact that her mom is a badass.
I'd argue that, like the word big, it doesn't convey anything evaluative.
Suppose I were a sports scout discussing a player with management. If I were to say he's big, the nature of the sport would determine the value of that prospect's bigness. If I were scouting for a football team, ascribing bigness to a player would entail ascribing something good to him. However, if I were scouting for an equestrian team, the opposite would be the case.
Likewise, the relevant circumstances determines whether the ascription of badassness to a person entails the ascription of something good to that person.