Well look, it's been a good year, you slaughtered a bunch of rams for the end-of-summer party (probably mid-July in Iceland), you can't eat another bite, your mother-in-law is in the corner muttering something about never wasting any of a good ram in her day, and you don't have a lot of space in the root cellar any more. So you gather up the testicles, put 'em in the wine press, boil them to keep 'em from going all sviðasulta on you, and you stash 'em in the spare barrel of lactic acid down in the cellar, only it wasn't as empty as you thought. Then at the winter solstice your cousins from Borgafjö∂ur show up unannounced and you just don't have enough súrsaðir hrútspungar to go around. Good thing you put away those ram testicles. When the cousins ask what the lovely luncheon meat is, you've just taken a big bite of Blóðmör and choke out something that sounds like súrsaðir hrútspungar. You don't give them the recipe until they've had a few more shots of Brennivin. And over in Borgafjö∂ur, it catches on.
Side-splitting. Asativum's matter-of-fact, conversational tone cinched it for me. I remember a story from Alan Lomax's ethnomusicological adventures in the Hebrides wherein he described the songs women would sing to keep rhythm while stretching wool soaked in urine. I had the same sort of question: who was the first to add urine to the recipe? Did they get their own holiday?