The re-written version looks to be for 5 year olds and as such would seem to be pitched at just the right level.
I first learned Drunken Sailor when I was about 8. Not all of it made sense all those years ago, to a child born and brought up in the 21st. century it's probably meaningless.
The version I learned had already been cleaned up anyway, in our version it was his belly not his bo**ocks which were shaved and only in later years was the captain's daughter added to the mix.
It would appear that this is not a PC version but a complete re-write for a younger audience, that's fine by me.
Does it really matter what 5 year olds are singing so long as they are singing something? If they discover at 5 that singing is great fun we might have a chance of giving them proper folk songs later on.
All the best