Erotic Christmas carol?

I wish I knew Italian and more Spanish to fully appreciate "Fata la Parte," a 19th-century villancico. This is how it goes:

Fata la parte
tutt'ogni cal,
qu'es morta la muller
de micer Cortal

Porque l'hai trovato
con un españolo
en su casa solo,
luego l´hai maçato.
Lui se l'ha escapato
por forsa y por arte.

Restava diciendo,
porque l'hovo visto,
¡o válasme Cristo!,
el dedo mordiendo,
gridando y piangendo:
¡Españoleto, guarte!

¡Guarda si te pillo,
don españoleto!
Supra del mi leto
te faró un martillo,
tal que en escrevillo
piangeran le carte.

Micer mi compare,
gracia della e de ti.
Lasa fare a mi
y non te curare.
Assai mal me pare
lui encornudarte.

Based on the translation by Ruth Caldwell and Ruth Westfall, this is my rough idea of what the song says: "Cortal's wife is dead, because he found her alone in his house with a Spaniard, so he killed her. The Spaniard escaped, but he should watch out, because if Cortal catches him and gives him a blow on the head, the very paper will weep."

In translation, the double entendre is not obvious. Can someone please unlock the double meaning for me? It is even said that this is a Christmas carol with a sacred theme. Is this true?