Not sure which Oxford dictionary you're using, but the Google one says

an abbreviation formed from the initial letters of other words and pronounced as a word (e.g. ASCII, NASA )

Maybe it's been changed?

And Merriam Webster online says:

The word acronym typically applies when the resulting thing can be read as a word

My position on the whole "word meanings change over time" debate is: I agree, but if you used to have two words with distinct meanings and now they are getting collapsed into one, that's mostly because people weren't aware of a subtle distinction. And that's not a good reason to make the distinction meaningless for everyone.

FWIW my original comment was a joke, I hope that was clear.