I sense two things going on here in this thread. First there is this bit about taking a song, any song, and fitting it to the performer and the moment. That is what I call interpretation.Second is taking a Steve Goodman song for example, and without even a by-your-leave changing the words around to make it more palatable, or politically correct, or add something to it that wasn't there, or wasn't intended to be there, making the song a tool of propaganda. This is not the same as parody. That is something else.
As to changing Stephen Foster songs, ummmmmmm, there I have real mixed feelings. Mostly I sing them when the audience and I have an understanding about the historical context of the song. The most offensive verses I leave out all together. Same with some of Henry Work's songs. Some audiences will accept them, some won't.
But Bill Staines' songs, now those my friends, I would never change the lyrics of at all. The chords, yes. The lyrics, never. That's arranging.