Seppo is Australian rhyming slang. It is short for Septic Tank - which rhymes with Yank, meaning an American. They're called that because, as they say, Yanks are full of S**t. That is, they talk big but their actions don't always follow what they say. In the hands of kids it probably was just another insult in their arsenal. It isn't used much these days. I believe it was mostly used during World War II when the Americans visited Australian ports in their quest against the Japanese in the South Pacific. Australian English is full of words with double meanings. It is littered with words that in other countries would be extremely insulting. But in Australia the tone of voice used can make them mean completely the opposite. I'm often told by people I meet online from other countries that our sense of humour is very twisted. I think I agree. Anyhow, use their tone of voice to guage if its agressive or just in good fun. If it's agressive, ignore them and keep on walking.