Would anyone say it nowadays? I've never heard of it and it seems google hasn't either.
"this is bully" - Google Search
Student or Learner
I would like to know the meaning of "This is bully" in the next passage.
On their second morning, the campers awoke to find themselves covered with more than four inches of snow. “We slept in a snowstorm!” exclaimed He. “This is bully!"
Roosevelt definitely meant by "This is bully" that he was delighted with the snow.
Bully for Yosemite - Daily Generic - HighlightsKids.com
The usage of 'bully' meaning good/great does survive, in British English at least, in the expression 'Bully for you', which means 'good for you', though it is often used sarcastically.