What Jesus meant by "do not judge."

It is commonplace to quote Jesus when he says, "Do not judge."  This is taken to mean that no person can have anything to say about what another person does, as in, whether or not it is right or wrong.  At first glance, this seems well intentioned.  For one, it is absurdly impractical if followed in this sense.  For another, it misses the real point of the message and has the unintended effect of creating the same situation which the teaching is aimed to prevent.
That our culture is widely hypocritical in most of its notions is well understood by many who even briefly observe culture.  We judge everyday, and we must, for without it, there is no law and order, and the structure of our society would fall apart.  We view some things as acceptable, and others as punishable.  There are, of course, a great many degrees in between, but even a casual observer will note that our society would cease to function under an ideal that allows no idea of good to take precedence over another.  The litmus test in this case is often on an action's effect on people other than the one (or ones) involved.  But even such an idea is ignorant to the real interconnectedness of our lives.  What we do in private affects others, whether we admit it or not.  A drug addict's habits affects more than just their own personal, private time.  Every decision or action, in some way, whether major or minor, affects the community at large.  Something as simple as taxes demonstrates this idea.  The rich are taxed more because most people believe the rich should contribute more to society.  But is this not a way of imposing one group's judgments upon another?  Is this not judging in some way?  Our society has determined that such a tax structure is right, even though a great many people disagree.  Their opinion is judged wrong in the eyes of society.
Really what we mean by this principle is a bit more selfish.  Essentially we mean, "don't tell me to do/not do anything that I do not or do want to do."  Often we may speak on the behalf of others, but the drive behind it is still very much the same.
But is this even what Jesus meant by this?  It is not.  Clearly what Jesus means is the notion of condemning.  For someone that knows little of the Bible, the difference here seems to be non-existent.  But the idea of condemning in the Bible has much more of an eternal significance than a situational one.  To extrapolate, the idea is something like, "do not condemn others to hell or you to will be condemned to hell (or risk being condemned to hell)."  But again, what's the difference.  To be clear, there is a big difference between saying an action or attitude is evil/wrong/worthy of hell and saying that because of said action, a person is condemned to hell.  The first is to recognize that we all make evil choices.  The second is to suggest that such evil choices are irredeemable and that the person is no longer worth trying to save.
Everything we do may be forgiven.  Jesus makes reference to only one unforgivable sin, and it is not intolerance, homosexuality, greed, sexism, racism, hatred, or any such thing.  It is blasphemy against the Holy Spirit.  (This is, depending on your perspective, to deny the work of the Holy Spirit and remain against God.  Various other perspectives exist on this issue, but they are not relevant here.)
So if this is the intended message, how does the popular interpretation undermine the original intent?  They do not initially seem that far off, so how could they be polar opposites?  The problem with "Do not judge," as our culture sees it, is that it creates a sense of apathy towards the spiritual lives of others.  Whether that apathy springs from condemnation which pronounces a person as beyond all hope, or if it comes from the mistaken idea that we have no right to tell people that they may not do as they please, the effect is the same. The condemning/not judging person has ceased to be a light in the world for the love of God.  Neither is acceptable, and both go against what Jesus taught.