There have been some recent studies on narcissism that a Scott Barry Kaufman outlines nicely in this post, and a blog on psychology today writes a 'field guide' to narcissism.
The dictionary definition of narcissism is: inordinate fascination with oneself; excessive self-love; vanity. I think this definition is a confusion, and too often people confuse Narcissism with Self-Love. Kaufman summarizes the behaviors of a narcissist as follows: "Leadership/Authority, Self-Absorption/Self Admiration , Superiority/Arrogance, and Exploitativeness/Entitlement."
What's striking about these features is how under the right circumstances they could be positive traits, i.e., having good leadership skills, self-esteem, self-confidence and the ability to seek help from others. But these are not exactly the opposite of the behaviors above. The opposite would be Passivity/Lack of Control, Self-Hatred, Inferiority/Insecurity, Self-Pity. So what is the 'core' emotion that these two sides rest on?
I think the answer is self-love. These are questions I think about a lot, because it is something I really struggle with. Often, I want to be proud of something that I have done, but I have a voice in my head that says if I start feeling proud I will become a narcissist. Since I won't allow myself to feel proud or good about who I am, I start hating myself. After a while I realized this kind of thinking had kept me from caring about others, in the same way those with the classic narcissism described above are kept from caring about others. Because of this, I've come to view narcissism and self-hatred as two sides of the same spectrum, and both emotions that lead to similar negative external behaviors.
I think self-love is the healthy feeling that resides in the middle of those two negative poles. The desire for self-love can be answered by one rejecting oneself and classifying oneself as unlovable, or this desire can be fulfilled by deciding that one is worthy of love by external standards(whatever deemed important by the individual: beauty, intelligence, success, partners with status). The first leads to self-hatred and second leads to narcissism. It is a confusion of the term narcissism and self-love to say that narcissistic people love themselves, because I don't think that they do in an honest way. I think to do this, you have to both fully realize the enormity of your flaws and find a way to love yourself for them without trying to will them away by living up to external standards.
I can't honestly say that I have successfully found a way to love myself in the ideal way I describe. But I think I have gotten a little closer by telling myself to "cut yourself a break, everyone has flaws but you are still lovable". I find this ironic because it is also the advice I would give to narcissists, although perhaps as "cut yourself a break, everyone has flaws but you are still lovable."