It seems odd to me that all the responses I've had to this post are from Americans who think Billy was a bad thing- and here am I- a Brit- sort of standing up for him- or at least for what he stands for in the myth of the Old West.
Precisely why this one reminded me of your Sarah Palin post. As I recall, you explained her alleged popularity in similar terms.
Part of the difficulty is that the western, as a genre, died in my lifetime. Some say it died with Mel Brooks's, Blazing Saddles.
If that wasn't the exact moment, it will do.
Another factor is that I grew up learning the truth of the Old West, such as the fact that many cowboys were black and sheriffs never carried six guns, at least not in town. The reality portrayed in westerns never was. I have always known that Billy was a buck-toothed killer and not a hero by any stretch of the imagination. About the only one of his kind that survived with his heroism intact was Butch Cassidy.
But perhaps the biggest difficulty I have is that I invariably associate westerns and western imagery with the worst sort of American chauvinism, exceptionalism, and reactionary politics. John Wayne, at least as he appeared on the silver screen, is upheld by conservatives as the quintessential Real American™, not in some symbolic sense, but as an actual ideal to be emulated on every level, from one's private life to foreign relations. Ronald Reagan, the malicious, gibbering old fool, is an obvious example of how such imagery is exploited for the most deplorable political ends. George W Bush is another.
And on a personal note, this is exactly why I love Blazing Saddles
so, especially after we elected a black man to the highest executive office of the land. In it's way, it was far more honest about America than all the other westerns combined.