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Interesting question. "Good people," referring to a group, family, business, etc., must certainly be so old and common as to qualify as a cliché. I would guess that the pairing of the singular with the plural evolved quite naturally out of the original group reference. And speaking of clichés, you know the one that says there are two kinds of people. In this case, there are good people and bad people. So if a person is a good person, he can be grouped together with all the other good people. Hence, he is good people because he belongs to the good people tribe. Now, let's see if someone can come up with the real answer.

Early 1900s, eh? Have you thought of the possibility that this expression was inspired when you were born? Everyone took one look at you and declared that "he is good people." (the way people should be made)

The earliest citation I found for "He is good people" after some quick research was from Routledge's every boy's annual, 1881, published in Great Britain. The small amount of text I can read of it seems to me that it's a piece of dialogue spoken by someone who's grammar isn't "standard." Perhaps the phrase caught on among the youths who read it and continued to spread.

The phrase does sound odd but it makes some sense to me. "Good people" is no longer an adjective and a noun, but one standalone phrase. So saying "he is good people" is much the same as saying "he is family." That's how I make sense of it, anyway.

I learned from the OED just now that "the good people" is euphemistic for fairies. First quotation listed is from 1588.