To overbear with words. A bully is a blustering menacer. (Anglo-Saxon, bulgian, to bellow like a bull.) It is often used, without any mixture of reproof, as a term of endearment, as:-
“O sweet bully Bottom.” —Midsummer Night's Dream, iv. 4.
“Bless thee, bully doctor.” —Merry Wives of Windsor, ii. 3.
Source: Dictionary of Phrase and Fable, E. Cobham Brewer, 1894
More on Bully from Infoplease: