This is a great song - haven't done it myself much since getting into the living history stuff. I always was struck by the line about "he wore his gun outside his pants" - it's such a great double entendre, equating one's manhood with his gun... but also bringing to mind that back in the old days, many towns had ordinances forbidding the wearing of pistols in the city limits. Doing so was a blatant violation of the law... just like you'd expect from somebody like Pancho.I'm not sure these are any specific people, either... it's just a good story. They can be anybody you want them to be.
I used to worry that I wrote too many sad and mournful songs. Then I realized Townes made a living off of it and I didn't feel so bad anymore.
Another of his songs I really like is Tecumseh Valley.