My friends and I tend to use it mockingly. Much like the other fellow in the thread, if we want to express we're joking about something we'll end with JAY KAY, LAWL or ELL OH ELL, to make fun of the other person. Or, if something's not actually funny, but it's supposed to be, we'll let out a little LOL action. WTF was used too, just as a slightly less offensive way to express displeasure, which is to say without actually cursing. It probably got worse while we were playing WoW, it seems to be creeping out of my regular vocabulary now that I've stopped.
But when I get back together with those guys, I'm sure it'll start again. It's not something I'd do in public, but it's funny when your friends have an understanding about how you use it (AKA: not seriously). If something's funny, we all laugh of course, like regular people.