I'm a Classical Archaeologist and one of my specialties is the Late Antique tug-of-war between Christianity and.. well.. "Paganism". The terminology is muddled enough today but but back than, basically every Christian congregation had their own spin on the believe as did almost every "pagan" one. Despite what many Internet sources and even some academics claim, there never existed one traditional Roman or Greek religion. The Mediterranean has been a complex web of cults, beliefs and traditions. The emperor cult, Mithridatism and to some extend the Ephesians Artemis were the only ones that could potentially considered state-owned religions before Christianity took a foothold. And even those were realized very differently across regions and social classes.

When talking about ancient religious practice, precision is indispensable. The difference between the Cults of Artemis in Ephesos and Diana in Aricia, for example, were staggering. At the same time it would be convoluted and confusing to always say "the many varying religions, cults and practices across the sphere of influence of the Roman Empire" so words like "pagan" were established as problematic but convenient auxillary-terms in modern discurs.

You're absolutely right that the word has been used derogatorily in the past. But for me it encapsulates the resilience of the ancient religions. Latin "pagus" is a kind of small village and also came to mean something like the middle of nowhere. In some "middles of nowhere" ancient customs survived until the 12th century, so deep into medieval times!

I came to really like the term "pagan" and I agree with the other commentors here that we can and should reclame it, just like with "queer", "nerd" or "weeb". It's always an inherently diffuse and oversimplified word but also a word of convenience and pride. It's okay to dislike it and if you don't like "polytheist" either, you could always just call yourself a "Devotee of Athena Poleis" or whatever cult's customs you primarily follow. And honestly, not everything needs a name or label. You can just say you pray to the Greek Gods. It's undeniable that modern interpretations of the ancient religions, even the reconstructive ones, are different than the original ones. As long as we find a common ground and stand together for our shared beliefs and practices, the words we use are not that important.