Is the etymology actually obscure? I seem to recall it gaining currency in the warblog era (late but not lamented) and it's a way of saying someone has their head up their ass. They're wearing their ass as a hat.

I remember this being explained a lot in various comment sections where folks would yell at each other about the war. It's hard for me to see this as folk etymology since afaik it's where the word itself comes from. Someone should ask Instapundit.