nothing but flowers

Well, context is everything. I know the Bad Use when I see it, but can't really define it outright. I guess when someone is ignorant of spelling and grammar rules and uses "lady," I'm more likely to assume they are ignorant in general and mean it in the old-fashioned, restrictive sense.

I certainly don't go looking for misogynistic intent if a friend uses it and clearly means it, as zinnea said, as a pure synonym for "woman." And some people are allowed to say "milady" with impunity. (Yes, you're one of them. ;-))