That's not an insult as the internet has decided. It can be used sarcastically, but in my experience as a southerner it is more often a compliment for doing something nice.
Context is king. Yes, anything can be said sarcastically. But when a child shares their candy with another child and 7 people are like "Aww bless his heart!!" It's not fucking code. The fact that it's usually used as a compliment is exactly what makes it so cutting as a sarcastic insult.
South Louisiana here. It can be used affectionately (seeing a sick child and saying Bless your heart) but I find it is more often used to point out someone's lack of intelligence or bad behaviour (Karen is pitching an absolute fit in the checkout lane at Albertsons because she misread a price label...Bless her heart)
Maybe you're from a more polite area of the south, but where I am we are heavily into calling out morons.
That's why it's so insidious. When used correctly you can throw people off because they have to question, "is this person grateful or do they hate my guts?"