"Muggles" is the title of a recording by Louis Armstrong and His Orchestra, recorded in Chicago on December 7, 1928.J. K. Rowling has indicated that she was unaware of this prior use of the term:
The title refers to the use of the word "muggles" as a slang term for marijuana amongst jazz musicians of the 1920s and 1930s. Armstrong was an enthusiastic user of marijuana, which was legal in most American states at the time.
I was looking for a word that suggested both foolishness and loveability. The word 'mug' came to mind, for somebody gullible, and then I softened it. I think 'muggle' sounds quite cuddly. I didn't know that the word 'muggle' had been used as drug slang at that point... ah well.