TBH, "Bless Your Heart" is really, rather, kind of like WD-40.  It's applicable in many situations with multiple, nuanced meanings.

It can, indeed, be an insult. 
It can also, when used with sincerity, be gentle and appropriate-- at a funeral, for example. 
It can be sarcastic. 
It can even be an exclamation. 

That being said, bless your heart!