According to German Wikipedia it is old spelling and thus, no wonder you didn’t come across it:

In Italian, the circumflex used to be used primarily in the pluralisation of words with a final -io to mark the coincidence of two -ii: il principio “the principle” → i principî, in contrast to i principi, the plural of il principe “the prince”. In addition to principî, there was also the full spelling principii, which was not pronounced correctly. Today, the words for “principles” and “princes” are spelt principi without distinction.

(translated using DeepL)

According to the English article, it is also used in Emilian and Friulian. In both, a long vovel is indicated with a circumflex.