Observations (opinion only and not from any special knowledge):
It seems to me that the rules for syllabification that you would find in a dictionary are for hyphenation in written (not sung, not sheet music) text. Not particularly relevant.
Then there's "singing well", as touched on by Susan (WYSIWYG), where you want to emphasise open-mouthed vowels for good tone production, using consonants for punctuation.
Then there's what "the folk" might actually do. :-) Malcolm touches on the issue of trying to transcribe what actually happened, when it conflicts with what might be more "correct" or even easier or more logical to a different singer.
What's your aim? Taking a text and trying to figure out how the lyrics scan through the notes? Are you singing for performance and working on good tone? Are you transcribing or emulating a particular singer's rendition? Are you transcribing for other singers' use? Compromises will be inevitable.
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Going back to John's original question, it sounds like WYSIWYG's going the direction you're looking for, so I'll quit now. :-)