Is the line about salt water part of an old expression for a very long time / eternity? I don't know about 'old'. I understood it that way on first reading just now.

I think what is appropriate/acceptable depends on the context of the performance. If the intention is to entertain the audience then the verse would only entertain someone who shared the prejudices of the character. If it's to give people an insight on the times then putting offensive words in the mouths of the bad guys is a standard dramatic technique.

Minstrel songs come up here regularly, both directly and through analogy as a warning against prejudice. If they don't go into the written record then the warnings might be forgotten. Written song collections have some characterstics of a museum whether that is the intention or not, and good museums do not hide the horrors of the past.