Warren Zevon has zillions of 'em, but my favorite is from Poor Poor Pitiful Me:
She really worked me over good,
She was a credit to her gender.
She put me through some changes, lord,
Sort of like a Waring blender.
I mean, who the heck would think of rhyming gender and blender? And putting it in a song? Well, I just answered my own question, I guess. Warren Zevon would.
“Littered campgrounds, folding chairs
Feed Doritos to the bears”
-The Dead Kennedys, Winnebago Warrior
Moxy Früvous’ My Baby Loves A Bunch Of Authors is a riot.
this one is amusing, but it’s hilarious when you actually HEAR it:
“I don’t need no make up
I got real scars
I got hair on my chest
I look good without a shirt”
The link is just that little bit, not the whole song, which is “Goin’ Out West” by Tom Waits, and which has awesome drums, heard in “Fight Club”.
“We got the bubble-headed-bleach-blonde who
Comes on at five
She can tell you bout the plane crash with a gleam
In her eye
Its interesting when people die-
Give us dirty laundry”
Dirty Laundry- Don Henly
A couple from Dylan:
She said your debutante just knows what you need,
but I know what you want.
Well he hands you a nickel, he hands you a dime,
He asks with a grin if you’re having a good time,
Then he fines you every time you slam the door.
I ain’t gonna work for Maggie’s pa no more.
“We hate to wake you up, but we can’t find the chief [of police]. Mayor said, ‘Use your head. If he ain’t in his car, he’s hiding from his wife down at Smokey’s Bar.’” 
Also Eminem’s “Leap tall hoes in a single bound.”
"All my Exes live in Texas…
…and that’s why I hang my hat in Tennessee!"
Dead Skunk- Wainwright Loudon
Crossing the highway late last night,
He shoulda looked left and he shoulda looked right.
He didnt see the station wagon car,
The skunk got squashed, and there you are.
Rocketman, as performed by William Shatner - ‘Mars is no kind of place to raise a kid. In fact, it’s cold as Hell. And there’s no one there to raise them, if you did.’
The line’s odd in all the versions, but Shatner’s delivery makes it transcendantly absurd, and I love it so.
Jellyfish’s Joining a Fanclub- ‘Shake that body, for me St Pinocchio.’
It’s just so delightfully bizarre an image (so is a lot of the rest of the song).
Lines from music: In a mass by Gounod, in the Agnus Dei, there is a line which sounds like it’s about to break into something from the Pirates of Penzance: “If I hadn’t in elegant diction indulged in an innocent fiction - Which is not in the same category as telling a regular terrible story.” It fair made me chuckle, I can tell you. (It’s a purely melodic joke. There’s no similarity in the words.)
From Julie Brown’s “The Homecoming Queen’s Got A Gun” –
She did a flip and hit her head; it was real acrobatic
But I was crying so hard I couldn’t work my Instamatic…
I can’t think of a line from that song that does NOT make me grin.
Please remember to post only a few lines from the lyrics (usually, just four or five) in light of copyright concerns; you can then link to the remaining lines. Definitely do not post the entire song.
“Pardon Me” by Incubus:
Hey, if you can’t get a word to rhyme, make one up!
Pretty much every line from “Bad Touch” by the Bloodhound Gang makes me smile. But, since Lyle Lovett has already been mentioned:
Sullivan [del]stole[/del] borrowed melodies from other well-known works and inserted them into his operas as musical jokes. Listen to Verdi’s Overture to I Vespri Siciliani and you’ll find yourself humming “Oh men of dark and dismal fate”. You’ll also hear a bit from the Anvil Chorus (Il Trovatore) just before the pirates begin singing “Pray observe the magnanimity”. And, of course, the chorus of “With cat-like tread” is an inversion of the Anvil Chorus’s most famous melody, while the scene in which it occurs is itself a parody of the abduction scene from Rigoletto. Sullivan clearly had Verdi on the brain while scoring Pirates.
In other words, the similarity you point out between “I’m telling a terrible story” and Gounod’s mass (which one, by the way?) is probably not accidental.
I like Frank Zappa. So many of his songs are grin-inducing, and I could list so many of them here. I’ll just quote one song: “Tinseltown Rebellion.”
…the Tinseltown aficionados come to see and not to hear
But then again, this system works as perfect as a dream
It works for all those record company pricks
Who come to skim the (modified lick from “Sunshine Of Your Love”)* cre-e-e-e-e-e-eam
From the cesspools of excitement where Jim Morrison once stood…*
The guy cracks me up.
I think you meant to say:
“Sullivan included homage to other composers with melodies from other well-known works…”
Just like Stalling. and Schickele, and many others. 
And now the line that needs no introduction:
Another fav, from Victim Of Love (Eagles):
From Wall of Voodoo
(Don’t Spill My) Courage
I was drunk on hooch four nights long
When I rolled underneath this mobile home
The folks woke up and drove away
Left me here with these two dead legs
Now I’m rolling, rolling, rolling
…and later on
The Lord took my legs
Now it won’t help if you pray
So don’t spill my courage away
No don’t spill my courage away
Elton John
Since God Invented Girls
The mother of invention made it good for me
Tighter in the rear
Longer in the seam
Kicked out yards of leather
Wrapped around her waist
Trimmed it to perfection
And left a little space
I agree w/ fishbicycle Zappa always makes me chuckle…
Muffin man
The muffin man is seated at the table in the laboratory of the utility muffin
Research kitchen… reaching for an oversized chrome spoon he gathers an
Intimate quantity of dried muffin remnants and brushing his scapular aside
Proceeds to dump these inside of his shirt…
He turns to us and speaks:
and from *Advance Romance
*
… Potato-head Bobby was a friend of mine
He opened three of his eyes in the food stamp line
He opened four of his eyes in the food stamp line
He opened five of his eyes in the food stamp line
He opened six of his eyes in the food stamp line