I can't say precisely who was the absolute first to use the phrase either, but I am aware of the first place I saw it attested to in print: COMICS JOURNAL #63 (1981), in an interview with Steve Englehart, although the actual phrase he uses is somewhat different.
Englehart, who first came to work for Marvel in 1971, described a change in Marvel's editorial priorities "around '74," which led, in 1976, to at least three talents leaving Marvel at that time: himself, Jim Starlin, and Paul Gulacy. When Kim Thompson inquires as to what editorial restrictions were being promulgated,
Well, just "don't be so bizarre. try not to progress so fast." There's that famous meeting that happened before the quitting time when Stan said, "I don't want progress; I want the illusion of progress now. We don't want people dying and coming out of the strips, we don't want new girlfriends, we want to try to keep it the same."
This, if it is an accurate recollection by Englehart, is ironic on two counts.
One, because Stan Lee had made Marvel's reputation on visible signs of progress within the structured expectations of the adventure-genre. Sean Collins' ORAL HISTORY OF MARVEL COMICS records this remark by Chris Claremont:
DC’s theory was that you cycled through an audience every three years. Stan’s revolutionary concept was, Why not just keep moving ahead?
And then, it's also ironic because by all accounts Stan Lee had killed off a fair number of characters themselves, and in 1974 had reaped considerable attention for the death of Gwen Stacy the year before. One may speculate that some of the bad fan-press Lee received for the Gwen character's death may have had some small influence upon this editorial reorientation.
What's interesting is that though Englehart's 1981 statement is the earliest I ever heard of these backroom dramatics, he obviously didn't think he was the first to bruit it about since he calls the incident "famous."
Granted, he was talking to Gary Groth, Kim Thompson and Ralph Macchio, who all had considerable familiarity with fannish lore at the time.
But had fandom as a whole really heard about the "illusion of progress" story before Englehart described it in 1981?
Inquiring minds, etc.
Philosophical extrapolations to come in Part 2.