Perhaps this song can be regarded as an Aisling, a dream or vision.

To me, it is the woman who says:

"A diamond ring I owned I gave you,
A diamond ring to wear on your right hand.
But the vows you made, love, you went and broke them
And married the lassie that had the land.”

But if she had a diamond ring, why did the narrator forsake her?
Perhaps she is spiritually like a diamond, and gold.

It took me a while to realize that the narrator left his true love (much like Kathleen Ni Houlihan, the spirit of Ireland), and ends up in the pay of England's overseas army. The English queen controls the land.