>So I can't tell if the author doesn't know what rancid actually means, or if there's some separate food science definition of rancid that is different from everyday use
More likely is that the average person doesn't know what rancid actually means in this context. Rancidity is a quality of oil that occurs when exposure to oxygen results in the existence of free radicals in the oil.
By and large, Americans actually prefer the taste of rancid olive oil.