You use so-called to indicate that you think a word or expression used to describe someone or something is in fact wrong. These are the facts that explode their so-called economic miracle. You use so-called to indicate that something is generally referred to by the name that you are about to use.

Is it rude to say so called?

If used on something generally considered positive and desirable, the phrase "so-called" evokes a rhetoric of falsity or fraud in the thing being referred to, which is a negative connotation as you said.

Can I use so called in an essay?

In many cases, so-called is intended, in no uncertain terms, as an insult. If that's your intent — to deride or insult — feel free to use this phrase. But if your goal is to remain neutral or objective, or to show the subject in a positive way, or simply to present information, then you should avoid this phrase.