Generally used to describe an article of clothing that is tragically heinous. Can also be referred to an unfortunate physical feature.
The proper use of "So Cute" must be used in sweet tones and show sincerity. Typically used between two friends to a third party, where the third party is completely unaware of the fact that he or she is being dissed.
"I love this shirt! Its so cute! Where did you get it hun?"
"Your new haircut is so cute, I love it!"
"You look so cute in this photograph"