I heard it, first, as a joke, in the early Seventies. The King has three daughters, The Ugly Daughter (Bleaaaahhhh!)
                The Nice Looking Daughter (Ehhhhh!)
                The Beautiful Daughter (Awwwwwwwww!)
Whom he offers to the knight. The names and descriptive sounds are repeated several times, as the knight slays the dragon, returns to the king, and refuses the daughters, saying, "I want you!" And that's the end of this fairy tale.
Like the song about the spinster and her tomcat, or the song about the scotsman and the blue ribbon, this one was born of somebody's funny story.