From my notebook of songs:

Lovin' Henry Lee
(traditional – variation of Young Hunting, Child #68)

"Get down, get down, lovin' Henry Lee, and stay all night with me.
The very best lodgings I can afford will be far better for thee."   
"Well I can't get down, and I won't get down, and stay all night with thee,
For the girl I have in that merry green land, I love far better than thee."

She leaned herself against the fence, all for a kiss or two.
With a little penknife held in her hand, she plugged him through and through.
"Come all you ladies of the town, a secret for me keep.
With a diamond ring held on my hand, my love I'll never forsake."

"Some take him by his lily white hands, some take him by his feet.
We'll throw down this deep, deep well more than one hundred feet.
Lie there, lie there, lovin' Henry Lee, 'til the flesh drops from your bones.
The girl you have in that merry green land shall wait for you in vain."

"Fly down, fly down you little bird, and light on my right knee.
Your cage shall be of purest gold; no need for property."
"I can't fly down, and I won't fly down, and light on your right knee,
For a girl who would murder her own true love, would kill a little bird like me!"

"Oh, if I had my bended bow, my arrow, and my string
I'd pierce a dart so near your heart, your warble would be in vain!"
"Oh, if you had your bended bow, your arrow, and your string
I'd fly away to that merry green land and tell what I have seen!"

Learned in the late 1950s from Helen Thompson. Recorded by Dick Justice on the Harry Smith Anthology of American Folk Music.

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From this text, I would say that Young Hunting, or in this case, Lovin' Henry Lee, is essentially innocent. In the first verse, the young lady asks him to spend the night with her and he refuses, telling her that he is in love with the girl he has "in that merry green land." She won't take no for an answer and when he kisses her goodbye (this may raise questions, but in some times and cultures, kissing by way of greeting or farewell was fairly common, and implied nothing beyond friendly intimacy), she stabs him to death. Not a nice lady, no matter how you slice it.

And the ladies of the town are not really a very nice bunch either, if they're willing to help her dispose of the body. And just whose well is it that they're polluting, anyway?

But—the diamond ring. Now, what's that all about? Could it be that they were engaged, but he learned that she tended to be a bit clingy and possessive, and got sorta nasty when she didn't get her own way, and decided that getting hooked up with her was not a good idea? And in the meantime, during his travels, he meets a much nicer girl "in that merry green land" and comes back to break it off with this young lady? Hence, he refuses her attempt to drag him into bed, says farewell, and in the processes of kissing her goodbye—one last kiss—she skewers him in a fit of pique? Lotsa possibilities here. . . .

And when the bird, presumably flying free, is offered the opulence of a "cage of purest gold," it not only realizes that she's not a very nice person and wisely refuses her offer to give up its freedom in exchange for a luxurious but confining abode. Could this be a metaphor for the kind of relationship that she and Henry Lee would have had, had they got married? Could it be that the bird is the transmuted soul of murdered Henry Lee come back to confront her? When she has another outburst of anger when the bird refuses her offer just as Henry Lee had done (fortunately for tweety-bird, this time she's unarmed), the bird flies off to that merry green land to fink on her.

I'd say that the ill-fated Henry Lee just got tangled up with the wrong woman. When he found his true-love and tried to break it off with the first woman, she attempted to hang onto him by dragging him into bed. When he turned her down, she didn't handle the rebuff very well. If Henry had been a bit of a cad and simply dumped her without saying anything, he might have lived.

Your mileage (and other versions) may vary.

Don Firth