I am curious if the saying "I'm flattered" can ever be genuine or not? The word is inherently disingenuous, right? Or can someone actually say I am flattered and mean thank you or that they are touched or something of the like?
Flattery does tend to slant towards the negative side. The differences between flattery and compliments are frequency and purpose. General wisdom deems flattery excessive in nature. A showering of compliments, it often detracts from the value of the words. I find that flattery comes from wanting to make oneself look good rather than making another feel good. It's what makes balding middle-aged men think so highly of the slutty 19 year old interns at work.
Now. When one says "I'm flattered" things change. When I say I'm flattered, I typically mean, "Thank you, I appreciate that but please do not continue with this unwelcome showing of affection." I often follow "I'm flattered" with the tricky conjunction but. (We've talked about dangerous conjunctions before, yes?)
So yes, it can be genuine, but it's not necessarily good.