The folk in the forest, they are scared of me.
The folk in the forest, they ask it of me.

That's not diction so much as stress, which is a minor obsession of mine. I don't sing with my speaking voice, but I always try and put speech-like stresses on the words - which in Eldergirl's example would almost always eliminate the confusion. (Unless the previous line was "Folk in general aren't scared of me at all, but...")

Some people sing as if English were as malleable as French - a series of syllables of interchangeable weight - but it doesn't work for me. I learned my version of "The holland handkerchief" from Norma Waterson's version on a Waterson:Carthy album; for ages I was singing "A wealth-y squi-er", stressing each syllable equally. (Usually I pronounce 'squire' as a monosyllable, to make matters worse.) Once I'd got the stresses into speech-like shape I had to re-fit the tune to the words, which was a pain, but it must have worked; when I did it somebody said they were reminded of Packie Byrne.