It's hard to put a exact date on the origin of "[de]virtualization" being used to refer to code obfuscation, but it's definitely been used since at _least_ 2007 in related academia. [0],
[0]: Kang, Min Gyung, Pongsin Poosankam, and Heng Yin. "Renovo: A hidden code extractor for packed executables." Proceedings of the 2007 ACM workshop on Recurring malcode. 2007
Either way, I found this paper that describes a certain obfuscation technique as virtualization [1]. I can only assume that devirtualization is meant as the corresponding deobfuscation technique. So maybe it is the correct, if unfortunate, term. Quote:
> Virtualization-obfuscation replaces native code in a binary with semantically equivalent and self-defined bytecode, which, upon ex- ecution, is interpreted by a custom virtual machine.
[1] https://cis.temple.edu/~qzeng/papers/deobfuscation-icics2017...
I remember relearning all of these terms were a big challenge when stepping outside of Lua.