It is a compliment to someone's who receives it because they will be of a certain character but was probably meant as an insult from the person who said it as they are foolish enough to think it was an insult.
We have a surgeon where I work who is outstandning in his field.
When he is taking out someone's oesophagus laparoscopically, he shouldn't be assigned a nurse who is well past her sell by date, is not up to date with current practices and is renowned as one who is awaiting imminent retirement.
When it's happened in the past, he has been known to make his feelings known and quite rightly.
I think you have described it perfectly hc. Anyone like this must have a huge swelled head and a superiority complex a mile wide. It is one of my most hated phrases. Makes me squirm!