You have annoyed me enough with your interpretation that I will comment, right now, just to get started gathering my thoughts, later maybe with something more comprehensive.
Bowie in the early 90s was very into the fine arts scene in New York. He commented in an interview in about 1990 or '91 that modern artists had to have a good story or pitch for their work. The art piece itself was only part of the equation. This observation was not completely derogatory, but more on the order of, that's the way it's done now. Traditionally, one thinks of artists being reticent, or even irked, to have to explain what their art "means."
Some of this finds its way into Ed, I think, but like a few other TM songs, there is a larger social commentary.
The first bit has a bit of both art and social commentary - we stole Manhattan Island from its aboriginal inhabitants. Andy Warhol's art is ensconced in a shopping mall. What's the interplay, if any? We took the island from what we regarded then as little more than animals and three hundred years later the island is the center of “civilization”, one where art and sales are indistinguishable. I see the stanza as an introduction to the song’s main theme, which is gotten at more directly in the following stanzas.
The Icarus stanza does reference a piece of art, but I don't think zigbot or joe has adequately gotten at Bowie's intent. The Icarus myth is about human hubris - that man could think himself capable of flying to the sun. Of course Icarus fails. Breugel's painting suggests that, rather than being ambivalent about the attempt, people fail time and again to learn from their mistakes or to temper their hubris.
I think zigbot's emphasis on the word "pratfall" to inform her interpretation is incorrect. Pratfalls are done for comedic effect. Our hubris is amusing to Mr. Ed.
The four and twenty black kids stanza is all social commentary, as is the song's bridge ("Some things are so big..."). Except for the first line's obvious appropriation, I discount the blackbirds nursery rhyme as being useful to looking at this stanza. Bowie had in two or three other songs over the two TM albums commented on the relationship between economic blight and race relations in the US and the apathy at the highest political levels to address the two, inter-related problems.
Simply put, the poor tend to be black and the poor tend not to vote as a block for their interests ("some of them are blind"). Therefore, there is no reason to worry about the poor. In Under the God Bowie calls the government "rightwing dicks in their boiler suits" and here they are "fellows with no heads."
The bridge could be read to support my guess on Bowie's use of Bruegal/Icarus. We can't learn from history. It's too big and our minds are too small to process it and use its lessons to correct social injustice.
So instead, we descend again and again into violence and chaos, as represented by the Sex Pistols in the final part of the song. Bowie always seemed to disdain punk rock, and I think it was for political as much as aesthetic reasons. Chaos isn't an answer, says Bowie. Golems were Frankenstein’s monsters – so laying Golem eggs suggests the cycle of human hubris, of men trying to be god and creating only havoc in the attempt.
Someone sees it all. Who? Mr. Ed, I wager.
But why Mr. Ed, a talking horse sitcom star from the 1960s? I never watched a full episode of this program - it wasn't funny. But the idea was that Mr. Ed was about as smart as his human owner. The typical plot revolved around the owner’s ongoing effort to keep Ed and his extraordinary communication ability and intellect hidden from the rest of mankind. “Alf” did the same one-note trick in the 80s, replacing a talking horse with a space alien. The comedy in both programs was to make the human characters look like oafs who take themselves too seriously and have an undeserved sense of self importance. The horse and the alien acted as observers, humorists, who pointed out and gently mocked our foibles.
That Bowie ever sat through an episode of this show is dubious, but if he's seen 15 minutes of it, he got the idea. And so he uses Mr. Ed, in this song, as the observer of humanity’s unfortunate drama. In the song, Mr. Ed has seen enough and is leaving us to our own folly, and ultimately, our own destruction.
"Once in Germany someone said 'nein'!" ~ Jeff Tweedy