My most famous case of misheard lyrics (I wrote them down because I was trying to learn the song, when I was about 10, and my auntie discovered it ) (it was her music, incidentally she listened to a lot of REM as well) was Two Princes by the Spin Doctors.

Highlights include

"This one said he wants to buy you rockets
Aim at his head, now"

"This one he got a pricey racket
That's what I said now
Got some big sneakers with his jacket
Aim at his head now"
(lots of headshots in my adaptation!)

"You marry me, your father will just snore you
You'll need his hat, now"

"Merry him, merry me
I'm the oompa loompa baby can't you see
Ain't got no future or vanity
But I don't want a picture of a heart to beat
I don't want a picture of a heart to beat"