Re: How did Buggy...
It is indeed because of bad reputation. It's been stated that the "shichibukai" need to have a troublesome reputation in order to scare away other pirates and cause fear in them. Although, i doubt Buggy can do that since he is weak BUT he does have a big mouth and quite the strong followers + connections now. - 1st = Being a crewmate of Roger Pirates.
Straight from One Piece wiki
The majority of the Shichibukai are composed of New World veterans; those who have met the Yonko or even confronted them.
Buggy's bad reputation
If the pirate in question can be used as intimidation, the position may be offered to them
- 2nd = They government believes that, he helped luffy break out of Impel Down [ world's toughest prison ]
- 3rd = Knows a Yonkou, aka Akagami shanks on a personal level. [ so that automatically makes him dangerous. Remember when supposedly Whitebeard & Shanks were making contact the world government flipped!!]