"Does anyone think that this ballad was based on these actual events?"
It is always dangerous to try to pin down these songs and ballads to actual events.
The fact that localities and names have been tacked on to them in their journey through the oral tradition has more to do with the ownership afforded to them by singers and communities than it has to actual events - a case in point being the ubiquitous 'Trees they Grow So High', often somewhat pretentiously named 'Young Craighton'.
The subject of the ballad was an issue long before the Craighton events and it is inconceivable that people were not making songs about it.
Wish I had a pound for each time I've been told by an Irish singer that one of their ballads (of Scots or English origin) "happened a few miles from here, or over in Galway", or wherever.
Jim Carroll