It was a way to say goodbye. I am not sure of its origin but I remember hearing/using the phrase in the 70s as teenager. It was a nice counter phrase to the general gloom and doom of the era. The Vietnam war was winding down but still weighed on peoples thoughts. The 1973 war (Yom Kippur) led by Egypt and Syria attacking Israel to reclaim land lost in the 1967 war. Followed by the OPEC oil embargo and a new word to describe the American economy – stagflation. So Peace Out seemed like an optimistic phrase when parting ways in the post hippie suburbs. The revolution hadn't come. America appeared to have lost a step and no longer could dictate terms to the world. Nixon resigned and for a moment we were truly adrift. Ford became president and Nelson Rockefeller was appointed VP. Ford had himself been appointed by Nixon when Agnew resigned. So we had two men who were not elected by the people in charge. Strange times when you think about it. So Peace Out and maybe Peace Now.