Yo, that is such an involved and complicated topic that I will have to think on it before I can give a good enough answer. Coon is a term referring to black people. I think we have had several discussions on the topic here; I will try to look them up and post the links here. In brief, I would have to say that it was not regarded as being quite as derogatory in those days as it would be today. The lyrics have been changed to Coot, so as to make it less offensive, and I think it would be good to use that term. It will likely be a couple of days before I get back to you on this. In the meantime, I will try to get some help from others who may be more articulate on the subject.
In the meantime, check out my site, and play the two versions I have there, by the Georgia Yellow Hammers and by Charlie Poole. I also have small pictures of the groups there.