I don't know the exact origins but the first time I encountered the "Hardcore" and "Casual" debate was in Dark Age of Camelot ...
I started playing soon after it launched because several friends from school were playing it and (for some reason) they decided to play on the Hibernia realm. Unfortunately, Hibernia was the last realm created and it was (obviously) rushed and there were several classes which were poorly balanced and full of bugs ... This was made worse (in part) because as they fixed bugs they generally created more balance issues.
Now (much like most modern MMO games) the only way to bring issues up to the developers was to post on web-forums and any issue that was brought forth to the developers to improve Hibernia tended to devolve into the "Hardcore" and "Casual" debate. The reasoning at the time was that younger (less experienced) MMO players tended to play on Hibernia because it was more brightly colored and "Hardcore" MMO players favoured Midguard because it was a much darker realm.
