Oh Dear! In all my years (which are considerable) of listening to and performing Lancashire songs, I have NEVER come across the audience reaction you highlight to "that" line. NEVER! Yes, I am familiar with the song, and no, it does not form part of my normal repertoire, but that's because I rarely sing well known chorus songs.
I have, however, frequently come across the "one of the drawbacks of living in Lancashire/ Lancashire mawkishness" attitude that prevails to our songs and have spent considerable time in trying to change people's perception of our County's spoken heritage with, I should say, some success.
I don't recognise your name and we may know each other, but, either way, please try to get to one of my talks on the history of Lancashire in songs, stories and poems. There's something you need to know. See my website calendar(sidcalderbank.co.uk) or PM me for a free ticket! - SID