Shinkage actually makes a pretty good point, though I disagree with his assertion about *who* is misusing the term... ;-)
I know this thread didn't start as a comparison of RPGs and CRPGs, but I figure I'll continue the digression...
Though a CRPG may have most of the trappings of a "True" RPG, most players of dice-and-paper RPGs resent the CRPGs because they are experientially VERY different. Sure, when playing a CRPG you're "playing a role" and even "gaining experience" to "develop your character", maybe even "making your own decisions" as you progress through the game...but it doesn't "feel" like an RPG.
And it's this "feel" I think that is the distinction. In a dice-and-paper RPG, the player is usually part of a small group with a dynamic that has evolved over time. Plus they are following a storyline that they have helped shape. Sure, the GM might have laid out the basic plot, but the players generate the story, the excitement.
In a CRPG, however, none of this is present. The player is either the only character, or has to keep track of 4-6 "player characters" that he rolled up for the game. There is no group dynamic. He controls the entire party. While there may be several plotlines available, he can only choose among them, not mix-and-match or even improvise his own. He can't accidentally stumble into the climax of the adventure and win through luck, clever use of skills, and sheer chutzpah.
And when there *are* multiple players, then it's usually the opposite extreme: The player is simply one of the "herd" of Great Warriors, Powerful Mages, and Infamous Thieves. Now he has interaction with other players, though it's on a very superficial level, but he's lost any semblance of a plot or story.
So, while it maybe be possible for a CRPG to match the "dictionary definition" of a traditional RPG, will there *ever* be a CRPG that can supply the "feel" of a traditional RPG? I doubt it.