It has a very wide realm of deffinitions and feelings behind it. The tone and context can change from something possitive to derrogatory. Sometimes it has to do with ethnicity (being a mestizo), other times with bad taste and lack of education.
I had not been fully aware of the meaning it has in Mexico and the US.. although, after reading many of the posts, I guess it does not lie so much far away.
Yo te adoro, mi cholita! ( i love you so.. my dear and gorgeous cholita/ mestizo girl ) - lyrics on many many peruvian, bolivian songs..
Mi cholito/a lindo! (obviously means my dear and beautiful indigenous-spaniard human being)
Ese cholo asqueroso ( that disgusting son of a bitch who doesn't even know what race he is)
Que cholo! ( that also depends on the tone you use.. .but usually, it will be referring to something done with terrible taste)