I don’t even think of handicapped people at all when I hear that word.
When people talk about 'privilege,' this is what they mean. When you really stop to think about it, a huge amount of our casual insults/denigrations come down to slurs on anthropomorphized objects. If you believe that propagating such language is hurtful to the people the slur represents, you can make yourself crazy thinking about all the synonyms for 'bad.'
Is it really awful? Who knows...probably depends on the degree, but one can imagine that someone actually living with whatever deviation, someone who spends their life with awareness that their 'lameness' means they will never be the Adonis- or Venus-like advertising model, might become hypersensitive to those words. I'm not saying that we need to shun people who use 'sucks [dick]' or 'lame' instead of 'bad,' but I appreciate the people who make that effort.
It's kind of the bring-your-own-bag approach to inclusivity. Using your own bag at the grocery store isn't going to influence climate change; stopping slur-based judgements isn't going to end discrimination; but they're things an individual can do to feel a little better.