The LGBT community have been dealing with these kinds of language issues for years. They work actively to appropriate language where they see fit. Some examples of terms they use casually amongst themselves include queer, dyke, and fag. They seem to take what was originally meant to be derogatory and thought: "Well, hey, that's what we are. We're homosexual. Thanks for the words."
In terms of the "gay" usage amongst young people (well, I suppose older people too), it is more of an issue of it being used in a different sense. Originally "fag," "queer," and "dyke" were meant as derogatory tags on people simply to point out their gayness and the fact they were different...Other...wrong....not-straight...going to hell, whatever.
The use we see with "that is so gay," however, has a meaning that hints at "That really sucks," "That is so bad," "That is so unworthy," "That is crap." This is quite different when you think about it.
They've moved from "Gay people are different from us, and so we will make up ways to point that out in a negative connotation to deride them" to "Gayness is bad and wrong and I don't like it, and its a great way to describe other things that are bad and wrong and I don't like."
This is the difference.
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Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön
Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot
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