This has proven to be totally unsustainable, at least on the internet. Still, I don't think most people make bad judgements out of fundamental malice, but out of a) lack of critical thought, and b) the phenomenon described in the original post where judgement towards others becomes a defense mechanism.
So what I try to do now is neither internalize nor outright dismiss others' vitriol, but to accept that it's probably a) rooted in something real and valid, and b) unrefined by critical thinking and also warped by social pressures to a point where it can't be taken at face value.
(I personally prefer to look at it as not bad and good, but rather loathsome and slightly less loathsome.)
Regarding your "loathsome vs less loathsome" statement: The key point here is that I know people that are very, very decent, and I've had some success in limiting my close friend group to only people like that.
At least as seen from here, something fundamentally changed starting around 2015, and a lot of people seemed to have lost their moral compass.
These days I hang out with the sinners. Saints are not to be trusted.
I acknowledge that it's a little weird to have one's model of human decency exclude such a large chunk of people from being defined as "good" (whatever that means). But it's grounded in the failure to meet very, very low bars for behavior, ones that most people would claim they agree with. Models are only as good as their usefulness, and it's much more useful to distinguish between those who are capable of empathy and the rest than it is to find a distribution centered around the population median.
[1] Or other forms of groupthink or outgroup homogeneity