Quotes from the Freedom and Justice Crier, cited above:

the FGC hymnal committee has wrestled with the concerns raised about "Lord of the Dance" by presenting Carter's explanation that "the holy people" refers only to certain Jewish priests and stating that, "'they' refers to the authorities responsible for the crucifixion, mainly the Romans." Rules of grammar tell us that the
pronoun "they" can only refer to the subject of the previous sentence, "the holy people."

Note: Carter's explanation. The author of this passage is willing to regard 'rules of grammar' as more convincing evidence than what Sidney Carter actually said.

We do not believe that anti-Semitism was Sydney Carter's intention in writing these words, nor that this is the intention of the hymnal committee or Friends who sing "Lord of the Dance" today.

So: no anti-semitism in Carter's writing; no anti-semitism in Friends' singing. No problem, right?

Singing the third verse of "Lord of the Dance" in its current form carries with it a well-documented, devastating historical and religious burden, no matter what our intent. ... Declaring our innocence does not remove the hurt that we cause by invoking these words. ... Each time we sing this verse together we lend emotional power and the appearance of support for what is in fact a lie.

"What is in fact a lie"? "'The words 'the holy people' in line 2 refers to the Jews" - that's a lie. "'The word 'they' in line 3 refers to the Jews" - that's a lie, too. "This song could be understood as anti-semitic" is a true statement, but also meaningless - show me the song that couldn't.

Besides which, the proposed improvements are either mealy-mouthed and clunky -

"Many holy people said it was a shame"

or just historically & theologically wrong -

"And I danced alone to the cross to die"

Jesus was crucified, in the passive voice - he didn't volunteer for it. And the holy people, of that time and place, were pretty much unanimous in deploring what he did, particularly on the Sabbath. To decry this kind of thing as anti-semitic, as someone said upthread, simply gives anti-anti-semitism a bad name.