twyngwyn has got it!

How you go, o changeable nymph! From the southern settlement thou pursuest an old peace but fell in with a cop, look out, America!

How you go, o changeable nymph! - reference to the definition of the whole word. "How you go" refers to a process (in this case, the process of change). The word describes a particular type of metamorphasis. I emphasised the fact that this is a change by using "changeable", and included a specific reference to the nature of this change with the use of the word "nymph". (The change is from the immature insect nymph.)

From the OED:

Of an insect: characterized by a relatively slight change of form during development, the immature form being a nymph resembling the adult though lacking wings, as in members of the orders Orthoptera and Hemiptera. Also: of, relating to, or included in a division Paurometabola which, in some classifications, comprises various insect orders characterized by development of this kind.

From the southern settlement = pa. The full word starts with pa, which is defined in the OED as:

Originally: a fortified Maori village or stronghold (now historical). In later use: any Maori village or settlement.

Origin: A borrowing from Maori. Etymon: Maori pā.

Etymology: < Maori pā stockade, fortified place.

In the 18th and early 19th cent. also found in quots. recording Maori usage, in forms heppa(h), hippa(h), eppah, etc. misinterpreting the prefixed Maori indefinite article he as part of the noun.

thou = u

pursuest an old peace = u is chasing after an old/obsolete word meaning peace. From the OED:

Rest, repose, peace. Frequently in ro and rest (also rest and ro).

(It's also interesting that in Old English, the word was in fact row.)

fell in with a = met a

cop, look out = BOLO. From OED:

Chiefly North American.

‘Be on the lookout’: a message or alert that is broadcast to every officer in a police force, or from one police station or law-enforcement agency to others in an area, asking them to be on the lookout for a suspected criminal, a fugitive, a stolen vehicle, etc. Cf. all-points bulletin (n).

America = US

pa + u + ro + met + a + bolo + us = paurometabolous

The alternative clue:

An audible punch, a right-facing choice had the befuddled group stink with an uneasy little biter.

Audible punch = a word that sounds like a punch, i.e., POW! = pau

A right-facing choice = the word or starting from the right (back to front) = ro

befuddled group = the word team scrambled = meta

stink = body odour aka B.O. = bo

uneasy little biter = louse minus an e = lous

pau + ro + meta + bo + lous = paurometabolous

And... yes, the song was "Row, row, row your boat" for the additional little bitsy clue of ro.

Over to twyngwyn.