If correct, that would make it a relic of the Peninsular War.
Of curse, the UK was supporting, not fighting the "King of Spain" at that time, but the reference in the song might just be meant to suggest the speaker's provincial naivete'. Historically, the King of Spain would more likely be an adversary than an ally.
As usual, there's no proof either way. (Oxford shows the word "peeler" to have been in use by 1816 in reference to the Royal Irish Constabulary.)