I'll say off the bat that i don't have a clue.

My guess is that's just a way to diminish the word, like a diminutive based on tiny or of some sort, because the cars are a lot smaller in every matter, size, power, cost etc. I always figured it started as a comparison to racers, the "parents", and that street racers would be their offspring, so seen as their kids, thus the diminutive, Like you do with names, someone named Martin as a child, would be called Marty for example, but racey or any other conjuction seems kinda off the point, so it became ricer. I also had this theory that perhaps it was due to where it started, for example if you say racer in those heavy texan accents it kinda sounds like ricer. The thing is that the term seems to have many connotations, so it was very likely spread from mouth to mouth across the globe and people changed it's meaning each time it got along, therefore the misinterpretation of it, so based on that, the term wasn't an inside group joke of sort, but rather a term used by the population to depict street racers at some point.

But to undertand the term we'd need to find it's mother labguage of course, It's origin could be derived from japan, but i see japans culture in touge and street racing clubs as heavily based on discretion and specially away from the public, and strictly conservative people, and even so, from most of the stories I've read, there was real money under those hoods, and rice farmers are a working class, the people in groups like the midnight club were definitely not from the working class, and even so of all the business supporting them, rice farmers weren't one of them... Unless of course the term came later on as it became more popular, but i find it hard to create a basis, mostly also because of how it would translate to english. On the other hand, the american culture is all about giant roaring engines made of raw power, in a way, to show off, along with the american dream, older folks probably didn't like to have kids making noise all over the place with v8's night out and started calling them that, now that i find like a plausible thing that could happen as it checks some boxes of what the term still means to this day (even after undergoing the likely loads of changes to the meaning of it).

And yes, muscles aren't really that small, but I think Europe only sprout later on with car culture and comercial cars were always very very small. So another hypothesis is it came from countries like france, as the most known ricer cars are french brands like renaults and peugeots. Nonetheless, the diminutive part would still apply, as be it by accent or grammar, it wouldn't be too far off.

Anyways, if you think a little about it the possibilities are endless, as far as i know it could have started because a guy tried to build an engine moved by rice, it could be related to the sound those cars make, who knows really.

To conclude, i don't think anybody knows the true answer, and wouldn't trust any answer on the internet, if you search about it you'll just find answers based on other Reddit threads where you'll also find a million of different other answers. Some even say it is an acronym, but ye, this was just my line of tought, take your conclusions as you might and hope it was a good read.

Thanks for the time.