Bule is the way that foreigners are often referred to in Indonesia. As such, it’s a similar word to haole (Hawaii), gringo (Latin America), farang (Thailand) and gaijin (Japan).
Is it impolite or derogatory? Maybe, but usually not. Given the high status that foreigners have often held in Indonesia (don’t ask me why) it’s often an honorific.
Is it loaded? Totally. Loaded and colored — white. Making it almost identical to gringo which means — essentially — whitey.
Indonesians use bule instinctively to describe foreigners that they see because that’s what they are — they’re bules. Nothing you can do about it. But the fact that you’re seeing the bule and recognizing it as a bule matters.
So what about a bule that doesn’t look like a bule (not whitish enough to elicit visceral cries of “Bule! Bule” as it walks down the street?
If a tree falls in a forest and no one hears it, does it make a sound? Mysteries of the ages.