My understanding is that narcissism is a slightly different thing:
> Narcissistic personality disorder (NPD) is a long-term pattern of abnormal
> behavior characterized by exaggerated feelings of self-importance, an
> excessive need for admiration, and a lack of understanding of others' feelings.
Seligman claims that people who have the "optimistic" asymmetry are happier and more productive than those who have the "pessimistic" asymmetry. Unfortunately, he makes no claims about other aspects of people's personalities, such as whether they are ethical.
I think you can be optimistic without having an exaggerated feeling of self-importance, and certainly it has nothing to do with a need for admiration or lacking understanding for the feelings of others.
So... I think the answer as to where to draw the line is, "If you are aware enough to worry about the line, you don't need the line."