I think it’s more nuanced and can mean both, depending on what the speaker wants it to mean. Like two buddies trading insults )it could be banter or of could be a genuine insult). The tone denotes the meaning.

Do you speak Farsi? The Hindustani variant Murdabad is never meant literally.

It’s still considered gauche, i.e. they tell you not to sloganeer with it at Indo-Pak border

It used both literally and figuratively in Punjabi, Pahari, and Pashto as well.

The problem they face, is it has become a well-known tradition in American (and Western) journalism, going at least back to the hostage crisis in 1979. If they change the translation now, people will attack them as pro-Iran/pro-regime/etc. It is possibly an even bigger problem when it comes to the use of the phrase against Israel; I wouldn’t be surprised if a change of translation in that context got labelled as anti-Israel, anti-Zionist, even antisemitic. The politically safest course is just to keep on doing what you’ve always done