Otaku derives from the kanji of "House" which much like is western counterpart "fanatic" Latin's root which is also "house". Ontologically, they mean being possed by an obssesion towards something that sometimes the obssesion is detrimental to one's health or wellbeing or the society in general.
Generally, otaku is not a term that is ostracized or anything. It is just one among the many epithets the Japanese call the subcultures within their seemingly "homogeneous" culture. Japanese really like to categorize things as well as people into groups and may not particularly habour any sentiments towards groups. Its just another way of looking at the world and things. Other word related to groupings are the -kei and -zoku. It is really on the personal realm when you express your sentiments towards the groupings.
Also, saying just otaku is incomplete in itself. There should be a noun identifier. So you could say, manga otaku, etc. Japanese are aware of this but most of the time they collectively call the male Akihabara-kei populace "otaku" only because they are the most ubiquitous and a strong market for specialized services. People outside Japan may have construde that definition only and neglected the real umbrella term it really denotes.
Bottom line, "otaku" is just a classification and expression of sentiments towards groupings are ,I deem, irrelevant. Everything is in the sphere of personal preference. You decide whether you would flame or praise people under the category.