I am working on a book with my own take on this routine, and I am trying to give credit where it is due. Could anyone tell me who first came up with the "2 in the hand, 1 in the pocket" concept?

Fechter was the first one I remember doing it. I read somewhere the he used to use balls of aluminum foil.

Mat Random

Thanx a bunch, Mat!

The earliest ref I have is in a Thurston book from 1926, but I'd guess it actually goes back pretty much forever, as far as the cups & balls at least...

Hey, I'm in Chicago too!

It's likely that cheesewrestler is correct. This sort of basic sleight of hand pattern probably goes back too far to be able to credit anyone. If you want to be sure, ask Jay Marshall and Max Maven. Together they know everything there is to know about magic history.
Seriously, I don't think you have to worry about stepping on anyone's toes.
Are you familiar with Pat Page's variation...one in the hand, two in the pocket? If not, you should check it out. I use it for one phase in a sponge ball routine. You start and end with only three sponges in your hands, which makes it very clean.
Dennis Loomis
http://www.loomismagic.com

Is this the one with the d**ble pop**?