Victorian Farm: Christmas Special has a segment on milling with a windmill, and the miller says that you adjust the gap between your grindstones according to the feel of the ground meal coming out. Allegedly, you catch the meal between your finger and thumb, and then determine the adjustments by “rule of thumb.”
Still think it’s a carpenter term for using the thumb as a rough ruler, but milling works too. I’ve also heard that it’s a way to check beer temperatures.
The “size of stick to beat your wife” is a pretty ridiculous legend, as the only measuring story I’ve found about that was in Islamic law. And I seriously doubt medieval English people cared what sharia law thought. Oddly, though, there are some late stories about English judges who allegedly decided cases based on the false etymology! So yeah, urban legends are dangerous things….