Hi folks- here's a nice long thread, I've skimmed it and enjoyed it and if I've missed someone relating what I have to say, then I'm sorry.
I first heard Raglan Road from a streetsinger on Grafton Street in Dublin. He wrote the words down for me, and I have been doing the song ever since. This was around 1990 or 91. This busker explained to me that Wim Wenders had built his film "Wings of Desire" around the lyric to "Raglan Road" and perhaps its because of this that my primary love of the song is for the narrative.
The "speaker" is an angel, a muse, or perhaps both.
He sees a woman and falls for her.
He knows it will be his downfall,(I saw the danger, yet I walked
along the enchanted way!") but he
says "Let grief be a falling leaf!" at the dawning of the day.
(i.e. "throw caution to the wind!") The danger is becoming to attached to only one charge- when he has many others to look after. He shirks his responsibility in order to follow her.
As an angel or muse, he can't communicate directly with her, so he shows his love in a different way.
"I gave her gifts of the mind.
I gave her the Secret Sign, that is known to the artist
(who has known the true god of sound and stone!)

I always took this to mean he inspired her, as a muse inspires an artist, by placing images or ideas into her mind directly through magical means.
"Word and Tint I did not stint- I gave her poems to say!" almost like a possesion. "With her own name there, and her long black hair like clouds over fields in May!"      
When he begins, again, to refer to hair and physical beauty, he has strayed too far from his role.
His desire becomes a physical desire, inappropriate for a muse.   
I always wonder what its like for him at this point-
does he actually see a way to get into her world, or is it just wishful thinking?
Wim Wenders' angel actually discovers that he can give up his wings, and enter the physical world, but the price is mortality, pain, to share the imperfections in the world of clay! And takes the plunge!

"On a dark street where old ghosts meet I see her... walking...away   from me so hurriedly.
My reason must allow that I had wooed not as I should.
(A creature made from clay.")
He's beginning to question his own actions here, isn't he?
It is not right for an angel/muse
to love a human being beyond the rules of his created function/destiny.
She, being mortal, has passed on,
leaving him, the immortal, alone and sorrowful.
In the end, he has relented of his "wooing".
That's why she's walking away from him,
and why its on a street where "old ghosts meet!"
She being mortal, has passed away, and he, immortal, is left behind.
Had he taken the next step in wooing her, he would, in fact, have lost his wings, but he doesn't, finally.
He turns back from the abyss.
I love that line-
"When the angel woos the clay he'd lose his wings."
and then he's back "at the dawning of the day," when he saw her first,
and said "let grief be a falling leaf!"
Perhaps a bit literal, but that's my reading.