person 1, "I just aced my bio midterm!"
person 2, "Nice dude, tottally lute!"
(here it is used as a compliment)
Person 1, "Your a loser!"
person 2, "oh yeah, well your tottally unlute!"
(here it is a slam)
these are bad examples, but i think you get the general idea.
And it is played a lot at Renaissance faires.
Legolass- O RLY?
Rexxar- Yeah! I just found a Hammer of Sundering and Bracers of Infinite Strength!
Legolass- ZOMG THAT IS SWEET LUTE!!!