I had never noticed this error myself, but someone else pointed out to me that one should refer to people who live in Scotland not as "the Scotch," but "the Scots." Scotch is correct as a different form of the word. Also, later in that song, Higgins refers to people who live in Arabia as "Arabians" rather than "Arabs."
As for the other line, perhaps I'm wrong, but I don't believe it's correct to add a word in the middle of a two-word phrase such as "be made." I believe "or even be made a knight" would be correct. (But "even" doesn't scan with the melody, which is why I suggest "You should get a medal, or perhaps be made a knight"_