Has anyone ever "deciphered" a paragraph?

[obelus]

It is perfectly possible for a cipher to decrease entropy.

It would be of great interest to have a historical example of this.

Morse code is a fine example.  The alphabetic representation of English is highly redundant at 4 bits/character;  Shannon himself demonstrated by experiment that the information content of written English is in the range 0.6-1.3 bits/character.  By exploiting the relative frequencies of English letters, Morse code compresses text to approximately 2.5 bits/character.

While this example may lie outside the historical period of interest, it occurred before the advent of analytical information theory.  It was just human ingenuity, responding to the pressure of limited communication resources (telegraph time), that drove the development of a more information-efficient scheme.  Perhaps earlier instances of economized ciphers could be found in situations where the time, space, or materials available to transmit or store messages were similarly scarce.