Can 'попустись' be translated as 'forget it?'
The original meaning of the word "попускать" is to allow something to happen. In my lifetime I have not heard it used that way. The meaning you are referring to seems to come from Ukrainian Russian speakers and has a darker meaning.
"попускать кого-то" means to humiliate someone. It is not proper Russian though, and comes from Ukrainian slang.
Consequently, when you tell that annoying guy at the nightclub "Попустись!" - "Piss off!" would be a much more accurate translation.
If you are telling your annoyed and agitated friend "Попустись немного", you can translate that as "Chillax/Let it go/Forget it". How your friend will take it depends of your tome of voice and how close you are.
It seems you're digging into some kind of slang. Попустить is quite outdated verb which means to tolerate, not to prevent.
And there's no reflexive counterpart "попуститься" at all. And reflexive form "попуститься" is found on truly rare occasions only.
Searching on the web shows that there's "teenage slang" word "попустись" which means relax, take it easy. But I must say I never heard this expression myself.
Semantic sense of "Попустить" in russian: It's derivative / rural synonym from word "Отпустить" prefix "по" in word "ПО_пустить" gives some symantic tinge to stepped and immediate action to end of release. For example: Наконец-то начало попускать. ( По-степенно отпускать. ) Наконец-то попустило. ( Произошло окончательное действие - отпустило)
There is also another meaning (slang one). "Попустись" is used when someone is high and has some weird ideas, and you want him to get sober before talking about the matter. Other use will be when someone gets paranoid because of being high, and you want to say that his paranoid thoughts are brought by drugs and probably have nothing to do with reality.
Also "попустись" can be used to say that some ideas are totally crazy, or over-complicated and relying on some crooked logic (without implying that opponent is high). Closest translation I can think of is "get sober", but I guess there are more suitable constructions in slang, which I'm not aware of.