Question regarding the usage of "Bang"

Solution 1:

It's slang. A bang up job is an expression in itself even if it might come from some other use of bang. However, bang used that way is usually a positive adjective, not a superlative.

On the other hand, something that is banged up is usually broken. You should be careful when to use the expression, as a bang up job could easily be mistaken by someone not familiar with both expressions for a job causing something to be banged up, i.e. a lousy job.

It's used both in UK and in the states. Perhaps symptomatically, in the states it seems to be more used for sex, crime and drugs. ;)