I've never used this particular variant of the piss prefix, but *we use it in place of very, usually in association with a negative description of something. As in, "The sentence I just wrote was piss poor.", or "That was a piss weak definition". Things can also be piss easy, which often means too easy. Things can also be easy as piss. This doesn't mean easy as very but.

I had never thought of the 'taking-the-piss' origin, but it makes a lot of sense.