I'm really glad this thread didn't go off into oblivion. I think it's one I needed to see.
First, about the song. I haven't heard it, but I suspect the music that goes with the words is fun. I also like the music for "Follow Me up to Carlow", but can't bring myself to sing it because I don't like glorifying war, battle, and beheadings.
I guess the offensive thing about these words has to do with the perspective. If I write a song that jokes about my own experience, laughing at myself, then my audience and I can laugh together, the subject of the joke has agreed to be the point of the humor, and I agree to the consequences of sharing my story. I might even find a way to laugh at my fear, or how I fit into stereotypes.
If I write a humorous song about how my sister is afraid to kiss me or let me play with her children, I might find a healthy way to deal with my circumstances. When someone else laughs about how they like to single me and my friends out to beat up, and the people around them laugh, I instinctively fear for my safety. It's even worse if I went there thinking I was among friends.
I can't expect that songs about violence or discrimination will be amusing to the subjects of the actions unless I'm the "victim" and can find a way to be amused.
I'm afraid that someday I'll be sorry for recording "Blood on the Saddle".