The trail of dees goes back to the mid-1800s, as follows.
First, OED Online defines "puredee, adj. (and adv.)" (with forms pure-D, pure-d, pure dee, puredee, pure-dee, puredy, pure-T, all from the 1900s) as
U.S. regional (chiefly south and south Midland).
Thoroughgoing, out-and-out, complete, real. Also as adv.: very, totally, completely.
["puredee, adj. (and adv.)". OED Online. September 2016. Oxford University Press (accessed November 03, 2016).]
The earliest attestation in the OED is from 1938, in the form 'pure D':
Mississippi: Guide to Magnolia State (Federal Writers' Project) 15 It's the pure D truth.
The definition given by the OED agrees with what I uncovered of the senses in use; 'pure D' is an intensifier, and is usually synonymous with 'thoroughgoing'.
The earliest use I uncovered was in the Waco Morning News (Waco, Texas) of 13 Jun 1912. There, the form is 'pure-dee':
"Captain Bill," as he is called by his old friends, is a pure-dee Waco booster.
Going forward in time, to bridge the gap between 1912 and 1938 (the date of the first OED attestation), the form 'pure D' was employed in a classified ad in The Houston Post (Houston, Texas) of 8 Nov 1912 (and other days):
640 ACRES pure D black land prairie, 8 miles from Liberty on shell road...
The next instance I uncovered, in the form 'pure-dee', appeared in the The Houston Post of 2 Feb 1915:
Next, a 2 Jan 1916 instance from an article in the Waco Morning News about a stage appearance that followed the showing of two motion pictures:
In The Times of Shreveport, Louisiana, 2 Mar 1916, the first appearance I uncovered outside of Texas is still associated with Texas:
In The Houston Post of 17 Apr 1916, an ad encouraging investors moralizes about thoroughgoing laziness:
A column-length ad for another "black land" farm uses 'pure dee' in the 17 Jan 1923 Courier-Gazette out of McKinney, Texas. The seven-year gap between this instance and the previous is likely an artifact of the limited resources I am able to deploy:
Having more or less covered the ground between 1912 and the 1938-2005 attestations provided by the OED, I looked for evidence that would explain what the devil the 'D' stood for. The ever-helpful OED suggested the etymology of 'puredee' was from compounding:
PURE adj. + D n. (see sense 3 at that entry). Compare DEE v.
(op. cit.)
Sense 3 of 'D' was given as
Used euphemistically for damn (often printed d——), etc. Cf. DEE v.
["D, n.". OED Online. September 2016. Oxford University Press (accessed November 03, 2016).]
Attestations for that sense from 1866 and 1877 are given. The verb 'dee', cross-referenced at both 'puredee' and 'D', is defined as
a. Pronunciation of d——, euphemistic for damn (see D n. 3); usually in pa. pple. deed (also deedeed) = d——d, damned.
....
b. as adj. = DAMNED adj. 4a.
["dee, v.". OED Online. September 2016. Oxford University Press (accessed November 03, 2016).]
Attestations from around 1845 to 1889 are given.
I reasoned from the suggestions that, if the 'dee' of 'puredee' was indeed a shortening of a euphemism for 'damned', the forms 'pure damned', 'pure damn', 'pure d——' or 'pure d——d' ought to be in evidence. For the latter two, I was able to find some such evidence, first in a 4 Jan 1906 edition of The Weekly Gazette out of Colorado Springs, Colorado,
and second in a 29 Feb 1912 edition of The Twin-City Daily Sentinel out of Winston-Salem, North Carolina,
While these instances do suggest that the basic hypothesis holds water, their appearance in geographically distant areas (Colorado and North Carolina) from the areas where 'puredee' was in evidence (Texas and Louisiana) made for some hesitation about accepting the hypothesis as entirely borne out.
Therefore, I searched for other evidence that the 'D' in 'puredee' was a euphemistic shortening of 'damn' or 'damned'. It seemed such evidence might be supplied by instances of 'dee' or 'deedeed' (or 'deed', but the needle-in-a-haystack nature of such a search discouraged it before I began) where the intent was clearly to represent 'damned'. Such instances, as it turned out, were not in short supply (relatively speaking); they were also chronologically precedent to 'puredee'.
Here are some illustrative instances, ordered from earliest to latest.
From The Indianapolis News, Indiana, 16 Nov 1871:
From the Burlington Weekly Free Press, Vermont, 15 Aug 1873:
From The Times, Philadelphia, Pennsylvania, 11 Jul 1878:
From The Wheeling Intelligencer, West Virginia, 22 Jul 1878:
From The Salt Lake Herald, Utah, 25 Nov 1894:
From The Brooklyn Daily Eagle, New York, 4 Sep 1905:
While none of the instances are from Texas, they do serve to illustrate that 'deedeed' (at least, if not 'dee' or 'deed'), in the sense of 'damned' was in common and widespread use for many years prior to the appearance of 'puredee'.
Further, I reasoned that if the 'dee' in 'puredee' was a euphemistic representation of 'damned', another common collocation of the period, 'double-damned' should be instanced. This hypothesis also bore fruit.
From The Tennessean, 20 Mar 1867:
From the Chicago Tribune, Illinois, 30 Mar 1878:
From The Indiana Democrat, Pennsylvania, 24 Nov 1887:
From The Times-Picayune, New Orleans, Louisiana, 25 Dec 1887:
From The State Chronicle, Raleigh, North Carolina, 21 Mar 1893:
From the San Francisco Chronicle, California, 5 Feb 1913:
Of the evidence presented, I suppose that the instances of 'pure d——' (1906) and 'pure d——d' (1912) are the smoking gun connecting the 'dee' of 'puredee' with 'damned', while the instances of 'deedeed', 'double-deed', 'double-dee-dash', and 'double dee-dashed' are supplemental.
For your first two questions, then, I have these answers, supported by the evidence given in the foregoing:
'Pure D' in the forms given by the OED entry for 'puredee' originated in Texas...or thereabouts...sometime before 1912.
The 'D' stands for 'damn' or 'damned'.
For your question 3, my research is ongoing, but so far the research indicates the term is in widespread if not exactly common use. Re-runs of a television show called "The A-Team: Pure-Dee Poison" contribute significantly to contemporary use, but other instances continue. In the 2000s for example, and discounting the television show re-run mentions, instances appear in Kentucky, Louisiana, Pennsylvania, Mississippi, Indiana, and Nevada. A preponderance of such instances appear in Louisiana.
Steinbeck seems to be using handy in the conversation as a truncated form of the idiomatic phrase "handy with his fists," meaning in a narrow sense "a good pugilist [in a formal boxing match]" and in a broader sense "a good fighter [in any physical altercation]." This is certainly the conclusion that a reviewer of Of Mice and Men, writing in 1937, draws in his brief description of Curley. From Fred T. Marsh, "John Steinbeck's Tale of Drifting Men," in the New York Times Saturday Review of Books and Art (February 28, 1937), reprinted in Michael Meyer, ed., The Essential Criticism of John Steinbeck's of Mice and Men (2009):
There are trouble makers in the bunkhouse Curley, the boss's son, a little fellow handy with his fists, likes to take on big clumsy fellows, pick fights with them. He wins no matter how the fight comes out, because if he licks the big fellow, every one says how game he is, and if he gets the worst of it every one turns on the big fellow for not taking [on] some one his own size.
Although "handy with [one's] fists" doesn't appear in Christine Ammer's American Heritage Dictionary of Idioms, it is a widely used and recognized set phrase in the United States and perhaps in Great Britain as well (where it probably originated). Here is the Ngram chart for "handy with his fists" for the period 1850–2005:
As you can see, the expression was most popular during the half-century from about 1910 to about 1960, but it has by no means disappeared in more-recent decades.
A Google Books search finds instances going back to 1833 (in England) in the narrower sense and to 1858 (in a U.S. publication, but by an author who spent considerable time in both the U.S. and England) in the broader sense.
From "A Trip to Paris with Mr. Jorrocks," in The New Sporting Magazine (June 1833):
Jorrocks too, as many of the readers of the N. S. M. are aware, is very handy with his fists, having studied under Bill Richmond, the man of colour, and is reported to have exhibited (incog.) with a pugilist of some pretensions, at the Fives-court; and considering all things, fists seemed as proper a mode of settling the business as any we could hit upon.
From Nimrod's Hunting Tours, Interspersed with Characteristic Anecdotes, Sayings, and Doings of Sporting Men (1835):
Our party at the Club, in consequence of the weather, was small, but everything extremely comfortable and correct; and in the secretary (Mr. Benjamin Ord, well known in the school as Ben Ord, and very handy with his fists) I recognised an old Rugbean, although he quitted half a year after I entered the school.
From "January Searle" [George Searle Phillips], Myra, the Gipsy Prophetess, serialized in Frank Leslie's New Family Magazine (May 1858):
"Ye may say that, ye may well say that, ye ill-favored tyke! There's no lad on all the head fit to stand in his shoon. He war as strite as a young poplin tree, and as handy with his fists as the best tawny ye've got in the 'campment; and no chap in these parts could fling him in the wrastling ring, or beat him at the foot race, or wark a cobel, or shoot, or fish, wi' the likes o' him. Wae's me! he's left his old mother many a long year, and gone across to Ingies, and I shall never see him no more."
And from Jack Hyfligher, M.D., and What He Did, serialized in Yankee Notions (April 1859):
They trampled up and down the hall, struggling and swearing, knocking now against the bannisters and now against the wall, until both got exceedingly exhausted. If Jack could have made the unknown stand off, he could have settled the matter very speedily, for as we have seen, he was very handy with his fists.
Best Answer
As Steinback noted in an interview, he was a bindle-stiff himself in real life. An old term used to refer migrant workers:
The Green’s Dictionary of Slang dates this connotation of stiff to the late 1800s:
stiff: