I feel in no way offended or attacked by Tim's comment. Was that because he used the word "ass"? You condone the use of "shit", which comes from the "ass", so why is one more offensive than the other?
For the record, 'shit' was a strictly 'verboten' word in Michael's day - enough to get you summarily banned with no further ado, assuming the offender survived the customary Schewe tongue lashing. The only acceptable form was either 'shyte' or 'BS'.
'Shit', is err ... 'shit' and, at the very least, indicates a startling lack of vocabulary.
Describing someone or somebody as an 'ass' is certainly less offensive than the use of the word 'shit' in whatever context. Anyway, ass is a shortened version of a 'horse's ass' as in 'don't be a horse's ass' , aka 'don't be a fool'.
Feel free to add to the etymology.