I grew up in South Carolina and we definitely did this (without the "please" and "thank you" part).
If I recall, there was an additional requirement where the ok hand had to be held below your waist, though.
UK here, the sign also had to be below the waist.
I have relatives my age in new zealand, and it was also common there.
Memes have an amazing power to spread, huh?
In the southeastern US. I'm a bit older so things like minor scuffles and fist fights with friends wasn't uncommon. We certainly didn't have as many rules as you outlined, and just used it as another reason to pick on and bruise each others arms.
The rules were: if you look through the loop, you are punched in the upper arm. The puncher has to draw a bull's eye first, then punch, then the recipient must say "thank you" and the puncher must reply "you're welcome" (of course in German, i.e. bitte, danke). Any deviation from the rules is punished by a punch, to be administered in accordance with aforementioned ceremony.
Where did you grow up?