I don't think he was ever really perceived as malevolent per se. There has at time been a perception of him as advocating power at all costs and for rulers to completely disregard what is "right" and the welfare of the people. In particular the "Machiavel" was something of a stock character in theater as the amoral councilor (most famously the character Machiavel in Marlowe's "Jew of Malta") and his books were banned by the Catholic Church for supposedly advocating against Christian ideals (not entirely unfair, actually), but I don't think cruelty for cruelty's sake has ever been a charge against him.

That said, obviously this view is incorrect and completely contrary to what Machiavelli actually advocated. This is not to support the facile idea that "The Prince" is satire or insincere, such a view is completely out of line with the texts of both "The Prince" and "The Discourses", to say nothing of his other writings. But even leaving that aside, "The Prince" is by no means a text that advocates unalloyed tyranny or a disregard for one's subjects. Everyone loves to quote the bit about it being better to be feared rather than loved, but forgets that he says that really, it is better to be both, and that although it is better to be feared than loved, one must not inspire fear in a way that inspires hatred.

Nevertheless a prince ought to inspire fear in such a way that, if he does not win love, he avoids hatred; because he can endure very well being feared whilst he is not hated, which will always be as long as he abstains from the property of his citizens and subjects and from their women.

Everyone also loves to say that he advocated cruelty, which is only true to a very limited point, because he provides a lot of nuance on the idea of "cruelty":

Some may wonder how it can happen that Agathocles, and his like, after infinite treacheries and cruelties, should live for long secure in his country, and defend himself from external enemies, and never be conspired against by his own citizens; seeing that many others, by means of cruelty, have never been able even in peaceful times to hold the state, still less in the doubtful times of war. I believe that this follows from severities being badly or properly used. Those may be called properly used, if of evil it is possible to speak well, that are applied at one blow and are necessary to one's security, and that are not persisted in afterwards unless they can be turned to the advantage of the subjects. The badly employed are those which, notwithstanding they may be few in the commencement, multiply with time rather than decrease. Those who practice the first system are able, by aid of God or man, to mitigate in some degree their rule, as Agathocles did. It is impossible for those who follow the other to maintain themselves.

That all said, I always think it is worthwhile to remember a massive theme that runs through Machiavelli's work that would have been very apparent to contemporaries but gets lost in endless unhelpful debates about whether he was being serious is his populism, which is almost a democratic instinct. John McCormick's Machiavellian Democracy gets into this well (as part of a larger argument about modern democracies), but Machiavelli constantly advocates trusting the masses over the the noble few, civic institutions rather than feudal ties and popular support rather than aristocratic favor. Most of his arguments for "cruelty" are aimed not towards the average person but rather towards the grandees that are constantly scheming for their own benefit.

I think your entire question revolves around a rather specific use of the word "Machiavellian." The New Oxford American Dictionary (the one pre-installed in a Mac) defines it as, "Cunning, scheming, and unscrupulous, especially in politics or in advancing one's career."

In Machiavelli's writing, both in The Prince and in his letters and essays ("On Appropriation of Money" is one of my favorites you might want to look at) the major take-away is that in politics, although it is best to be both feared and loved, if you have to pick one it's better be feared, and the main corollary to that conclusion is that in politics the ends justify the means. This is a rather cynical but practical worldview; a politician who applies it can certainly be described as one who will also have to be cunning, scheming, and unscrupulous. And Machiavelli, while in the Florentine public service, most certainly advocated his cunning and realist brand policy to advance the both the Florentine state and his faction within the state. But I'm sure you've noticed a surprising amount of Machiavelli's work is dedicated to just that: the best strategy to ensure the success and survival of the Florentine state. Does that make him a bad person, or just a cynical one who wants the best for his country?

So is the descriptor "Machiavellian" overused, because it is nowadays applied to nearly all malevolent scheming? That's a matter of opinion. I happen to think it is, but it's hardly a question of history; we don't know if Machiavelli was a genuinely nice guy or not, nor was he the single decision maker in the Florentine government such that we can point to a specific action taken by him to pass a judgement. Of course, you could believe that Machiavelli in his writings has got the analysis of human nature all wrong, and subsequently conclude that's enough to associate him with malevolence. But again, that's hardly within the purview of historical analysis.