I don't know the etymology, but I think it's more likely that the colloquial definition of "rancid" evolved from the condition of rancidity in other oils, such

I don't know the etymology, but I think it's more likely that the colloquial definition of "rancid" evolved from the condition of rancidity in other oils, such as animal fats, that render them unpleasant and smelly, as opposed to just tasting different (as in the case of olive oil).