1)
Does age relate to the fact that in the second line Laguna is "Ol'"?
Haha, this is almost going too fast. Yes, correct.
2)
when you give in for your age do you replace a word with the word in?
Maybe...
3)
Yes, the 'previous word' is in the first two lines.

The above points lead me to believe that you replace with word Ol' with in.

And as I posted above according to a dictionary of idioms 'lo and behold' is the same as look'

So,
Look in Laguna says to Ellone

The answer is a gun?

Way to go HolyMackeral youve made it worse, it makes no sense whatsoever!