Rancid isn't the same as rotten. Oil going rancid is about oxidation and other chemical degradation. This has nothing to do with "health" of the oil...
It has to do with the health effects of the oil. It radically (pun intended and yes I know that's not the only mechanism) transfoms the lipid profiles and generate compounds which for some we know may have health impact.
That's what a few studies seem to hint at. As with most food stuff studies we need time and lots of replication. And make sure that the food lobbies didn't mess up like what happened with the sugar industry.
The top definitions of the word agree, e.g.:
> having an unpleasant smell or taste usually from chemical change or decomposition
> having a rank, unpleasant, stale smell or taste, as through decomposition, especially of fats or oils