I actually recall this practice being alive and well in various USENET enclaves, easily as far back as 1990. I always thought the concept behind it was essentially one of efficiency. You have to press two keys at once to make a capital letter, and some people who really like to type fast -- or I don't know what really -- who just couldn't be bothered by having to go through all the trouble of typing a capital letter...
I also thought perhaps it had something to do with a kind of hyper-egalitarianism. If all caps was talking loud, then a person who wasn't all that into himself might forgo the capitalization of "I".
There were probably even aesthetic underpinnings of the practice for some people in the spirit of e.e. cummings. That in literary circles was about the hyper-egalitarianism of the letters themselves. This is the height of the era in which the Gen-X parents were ascending to the cult of the self-esteem-based (pseudo) psychology that they would later implement full-throttle in the rearing of their children.
Many people who are in the mode of not capitalizing I, usually don't capitalize anything in the sentence. But this mixed breed of non-capitalizer I do see quite frequently.
Most of the technology-focused people that I know have long since abandoned the practice.
It's clearly something of a fad or a fashion that goes in and out of style and seems to move from group to group.
I'd be hard pressed to say that it is ever "correct." I think you can use it acceptably, as a faddish or cliquish statement, or stylistically in creative settings (rec.arts.poems?) but that's about as far as it goes.
I do think its origins are in Internet culture. But, obviously, you can also go back to some of the beat poets (1950s) and, as I mention, e.e. cummings for sophisticated cultural references. But I don't think that is really why most people do it.
There's got to be someone out there who can provide some more concrete examples from the USENET days. It wasn't ubiquitous, but it was common, and I'll bet there were some lively discussions about it at the time and some specific meanings that at least some people had decided to attach to it.