I think the biggest thing that separates Nero from other emperors at this time is the fact that he was actually deposed in his lifetime and thus didn't have successors telling people not to write bad stuff about him. For instance, I would love to see the source on the previous poster's point that he supposedly set people on poles and lit them on fire to provide light. That seems evil enough but if you take 5 minutes to just think about it you realize that it sounds apocryphal as hell. People do not make good lanterns. If they did, you'd see a lot more use of person-like animals such as pigs used in this fashion.
To the point about considering the sources, one of the best places we have for Nero is what's left of Tacitus' work called the Histories. These were written as a means of saying "this guy we have right now, whatever you think of him, he wasn't really THAT bad, people. You want badness? Check out Nero and the Year of the Four Emperors". Tacitus has every reason in the world to believe and put into writing some of the more scurrilous rumors about Nero and every reason to diminish or flat-out ignore his virtues. Even supposed good qualities such as Nero's popularity among the common people would have been viewed as a good reason to get rid of him by the people of his time; a hundred plus years removed from the final fall of the corrupt Republic, people did not have good memories of democratic rule.
And, of course, a lot of what we have left, we have because medieval Christian monks decided to copy it down and save it. Nero was greatly despited by early Christians, to the extent that the "number of the beast" from Revelations is argued by some scholars to be a coded reference to "Neron Caesar". It's not surprising at all that a villain of Christians would later be passed down by Christians and portrayed to be villainous.
As to the question of whether or not Nero was really that bad, I'd have to say "almost certainly not" because it's hard to conceive of anyone being as bad as Nero was made out to be. For instance, the Wiki article notes that there is simply no evidence that he actually kicked his wife Poppea to death because he grew bored of her. He built a bunch of public works, including gymnasiums and hippodromes, and when Rome burned he took the opportunity to engage in a massive public works project in the city (and, likewise, there is just not a lot of direct evidence that he engaged in arson or stood by and let the city burn itself out, "fiddled while Rome burned" so to speak). He was eventually deposed, of course, and was supposedly rather cowardly when he attempted to run off instead of, I guess, take the sword to the gut like a real man. The end of his reign is only a little bit extraordinary when you look at it in the context of the people during that century, though (and hardly unique - see Caligula); many, many emperors would meet an untimely death in the centuries to follow.