Yah, I think you’re right about Tolkien being the original source, but variations of it were everywhere back then. Some D&D modules used it, for example, and other paper RPGs. No doubt all pilfered from Tolkien like everything else fantasy-related was back then (and now) but who knows where any specific game took it from.
Ultima may have done it as copy protection, but just as likely Garriott used it because he liked the thematic verisimilitude. It was a lot of work to program a custom font renderer on the Apple II just for it, which he wouldn’t have done just for copy protection. Temple of Apshai did something similar- they offered the option to play the entire game in a sort of pidgin of Old English, just for the perceived authenticity of it. I’d guess that’s where Garriott got the idea.