Whether native or Gothic, it possibly was chosen on model of Latin "paganus," with its root sense of "rural" (see definition of "pagan"), but that word appears relatively late in the religious sense. Or the Germanic word might have been chosen for its resemblance to Greek "ethne" (see gentile), or it may be a literal borrowing of that Greek word, perhaps via Armenian hethanos [Sophus Bugge]. Boutkan (2005) presents another, most probable theory:
The Germanic word "haiþana-" referred to a person living on the "heath", i.e. on common land, i.e. a person of one's own community. It would then be a neutral word used by Heathen people in order to refer to each other rather than a Christian, negative word denoting non-Christians. Nevertheless, there is much evidence in the many Sagas of Odin's-Few using the title of Heathen for themselves. An example—In the year of 1019 CE—the Skald named Sigvatr Þórðarson wrote of an Asa-man that identified himself as a "Heathen" (Heiðinn), in the Saga of Austrfararvísur. Eyvindr, an Eddaic skald, who wrote from a Heathen prospective, eulogized king Hákon. Eyvindr’s dedication poem to Hákon sends the dead king off to Valhall. In the final lines, the poem reads;
Cattle die
Kinsmen die,
Land and lieges are whelmed;
Ever since Hákon
to the Heathen gods fared,
Many a liege is laid low.
“Heathen” was not an official or common derogatory term used by the Roman Christian Church to describe, disparage, and/or ridicule those that honored their native Gods & Goddesses. In all the official and oppressive laws concerning Heathens, the official & legal terms used to describe them were “Paganorum” and “Gentilium." Many examples of the derogatory usage of "pagan" can be found throughout the “Lex Saxonum”, a set of laws enforced against the Saxon Heathen Tribes of NW Continental Europe by Charlemagne’s decree in 803 CE. The term "Pagan" is in fact the only still-existing term that historically was used to derisively describe non-Christians, and in particular Native Faith Heathens.
Nevertheless, "Heathen" is used in these web pages in a vernacular, non-derogatory manner to act as a generalized term (synonymous with Old Roman term of "Germanic" as applied to Native Europeans Northwest, North, Northeast & East of Rome). It is used as a respectful term to describe the past/present, archaic and modern practice & practitioners of Asatru/Odinism (which includes Vanatru, Disirtru, Irminism, Wotanism, Theodism, Odalism, Forn Sed, Fyrnsidu, Northern Tradition, as well as cognate faiths of Rodnoverie, Yngliism, Rodzimowierstwo, Ősmagyar Vallás, Romuva, Rodnova, and other Eastern, Finno-Ugric, Baltic, Slavic Native Faiths, and generally those practitioners of the native/organic faiths of the Indo-European peoples)...