I've always taken the album to be about this character that mirrors Bowie in creating Ziggy, but isn't Bowie (if that makes sense)
The first few songs are this kid growing up, falling in love, being normal, basically. Then there's Starman, where the kid dreams up a fantastic story for this great song he heard on the radio (Space Oddity? "Then the loud sound did seem to fade Came back like a slow voice on a wave of phase That weren't no D.J. that was hazy cosmic jive")
So kid tries to become this character he's invented... Lady Stardust is his first performance, told from the third person, because he feels so distanced from the persona he's invented:
"The boy in the bright blue jeans
Jumped up on the stage
And lady stardust sang his songs
Of darkness and disgrace"
The boy in the bright blue jeans is the kid, but the when he jumps on the stage it's Ziggy who's performing... (Lines like "oh how I sighed when they asked if I knew his name" seem really different from this perspective.) Star is pretty self-explanatory, part of the same process.
Hang On To Yourself is the only song where Ziggy really is a full-on rock star... It's just the stardom experience. And then, we get to the song in question.
"He played it left hand
But made it too far
Became the special man, then we were Ziggy's band"
Is strange assuming we're hearing it from the character who plays Ziggy... It goes along with the idea of him feeling swept away by his character's actions, out of control. Makes sense like this, up until:
"When the kids had killed the man I had to break up the band."
The problem with this interpretation is: Who is the man? Is it Ziggy, or is it the person who created him? I take it as the latter -- the fans (groupies, more accurately) put so much of an image on him that the character replaced the man entirely... Feeling trapped, the character-who-created-the-character breaks up the band, and we end up in the washed-up rock-star period of Suffragette City, and then Rock-and-Roll Suicide.
That last song I read as Bowie sympathizing with his own character (the one who created a character), or maybe it's the other way around. Anyway, that's outside of the topic... I just had to give my take on the whole album for the Ziggy interpretation to make sense (I know, the take can be a stretch at points, and I'm hardly "certain" about it... It's just the only interpretation I've come up with that actually works consistently throughout.)