[thaumasiotes]

I believe "terrible" in the sense given for 厉害 is as in "I am Oz, the great and terrible", not the ordinary sense of the word.

[dwohnitmok]

This. It can be used more colloquially than the equivalent meaning of "terrible," where it's closer to something like "awesome." It can also generally used as a marker of intensity. In no case does it mean "bad at something."