A wonderful figura etymologica. And one with an interesting history...
The phrase originally comes from Horace, Epistles 1.1.59–60, discussing a common saying or song of children's play and using it to make a general point about virtue. 
It was a common saying in ancient Rome. cf. Otto, Die Sprichwörter und sprichwörtlicher Redensarten der Römer §1537, with further examples. And seems to have been common in Greece as well, since Plato mentions a similar saying at Theaetetus 146A.
Etymological associations between rex/regere/recte are also seen in Roman law and political thought. Perhaps the most important text in this tradition for Isidore was Augustine, De civ. Dei 5.12 (drawing on Sallust and, possibly, Cicero)
These two strains—the political and the moralized children's song—come together in Isidore's Etymologies (9.3.4–5)
From Isidore, they pass into the 7th c. Visigothic Code, a.k.a. the Forum Iudicum (among other names). And from there into the 13th c. Fuero Juzgo of Castille.
The so-called Primus Titulus, De electione principum ("on the election of princes") §1 contains a discussion of the nature of kingship drawn heavily from Isidore's Etymologies and also from the acts of the Fourth Council of Toledo—over which Isidore (probably) presided.
And that (in brief) is the story of how St. Isidore of Seville turned an ancient Roman nursery rhyme into a fundamental principle of medieval Spanish law.
