I just came across this discussion while googling Dolly Fosset just after hearing this song on RTE Radio 1. I already knew Dolly's was a house of "ill repute" in Dublin's past, but was checking for exact location.
Meanwhile, most of the earlier questions have been answered. I actually saw (and boy did I also hear) Bang Bang in action just once. I was a small boy and had been brought into town (Dublin) to see some theatre show which I've long forgotten... but I still remember the sight of Bang Bang hanging from the back platform of a speeding bus (platforms were open in those days) and pointing his key at the pedestrians. His roar of Bang! Bang! was deafening ... and resulted in great street theatre as young men leapt behing lamp posts and dustbins to "return fire" with their fingers... but Bang Bang lived to fight another day.
As regards Pete St John (not his real name but I forget what that is) ... he is (or was???) a qualified engineer who preferrred music. He also wrote Dublin in the Rare Ould Times and The Fields of Athenry.

The reference to now we're all playing Bang Bang surely refers to the amount of real shootings now prevalent in Dublin ...