I had heard this before, but another LC buddy of mine seemed to think it was offensive. I wouldn't consider it deragotory towards Japanese people/culture as it is meant as a compliment, I just couldn't vouch for the general public.
Yeah, I was sort of kidding, as you probably know that I'm Japanese.
I guess it would be somewhat similar to a black(African-American) person calling himself, etc... a "n$gg#r", etc...
I would be OK, but it would probably offend a lot of Japanese who understand some/little English, especially those who endured the WWI/II era.
Carry on!