"an example of people rewriting traditional material"
Not necessarily - it is more likely to be a case of modern minds attempting to make sense of a centuries old ballad - as is happening on this thread a we speak (so to speak).
"weapon knife"
Without looking it up, I think this appears in an American version; I have always assumed it to be a case of a singer from one culture coping with an unfamiliar piece of vernacular from another - wee pen-weapon.
Some of the versions give the killer as being a "banished man" which, for me, clears away any question of his not being recognised by an estranged family member.
While it is interesting to speculate on these things. I think there is a danger of making these things far more complicated than they really are.
Of all the ballads, Fordie/Airdrie/Babylon is one of the least problematical when it comes to interpretation as far as I'm concerned.
Jim Carroll