This is an excellent topic and I am sure that we all have different 'lines' that we draw, both ther reviewer and the reviewee. I sometimes have the same concern, and I sometimes feel that others cross the line. So this is based on my viscreral responses to critiques I have read.
It's important to be specific. It doesn't help the writer much, if all you say that you do or don't like. If you think it can be improved, say how. That said, there is fine (and sometimes vague) line between giving direction, and trying to rewrite the lyric.
I think offering suggestions such as changing a specific word or phrase is fair game. Suggestions on a specific re-arrangement of the structure can be very helpful, especially if you feel that the writer needs to develop that skill. But adding suggestions to the point that the meaning changes, or that the lyric goes in a different direction, is crossing the line. I think the change that you suggested...
"However I was going to suggest a title change, which would have required a reasonable rewrite. Is this going too far?"
...starts to insert your own vision. When I read it, I thought, "Write your own song" and that might be how I would feel if it was my lyric you are criting. If changing the title will require a reasonable rewrite, then I would guess that the title you have in mind isn't really the right title for that lyric, but for another one that you is forming in your mind. That may sound overly sensitive, and it probably is, but the fact is that if your critique starts to make the writer feel like you are stepping on his/her toes, the critique will not be helpful.
Which brings us to the matter of how the author should respond to critiques. I think the answer is to use the critique constructively as far as you can find value in it, and let the rest go - never take it personally, no matter how misguided think it may be. In that regard, I agree 100% with the other responses above.
