As far as I know, Avalon was easily the first MUD to use this particular system, and they took the idea of it from a pen & paper combat system (just like they and virtually every other MUD has taken many things, like the ideas of health, mana, and orcs, for instance. Avalon even had "Uruk hai" as well as spell texts taken verbatim from Lord of the Rings, though they eventually removed those I believe.)
I want to say the game they took the idea from was En Garde (the pen and paper game/dice game, not the Reiner Knizia card game) but I'm not really sure offhand. I had a copy of it a looonngg time ago when Avalon's owner and I lived together, but looking at what comes up for an En Garde game search on google, it doesn't appear to be the same game. I might have the name wrong too.
--matt
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