Ah I see, this makes sense.

In my experience, it's almost always used in the latter (incorrect) sense.

In a logical discussion whataboutism is never a relevant response. If something is bad it is bad if any side does it. But hypocrisy as a fallacy don't necessarily apply when discussing geopolitical power struggles. This is because people on one side using a tactic but not the other is usually a disadvantage, so when someone accuses you of hypocrisy they're basically saying that you're trying to get me to stop, but you won't, which will give you the upper hand, so... why should I stop?