Counting Crows’ “Mr. Jones” mentions Picasso and Bob Dylan:
If I knew Picasso
I would buy myself a gray guitar and play
I wanna be Bob Dylan
Mr Jones wishes he was someone just a little more funky
Pablo Picasso was never called an asshole
Not in New York
- Jonathan Richman and the Modern Lovers
Leonard Cohen, Tower of Song:
‘I asked Hank Williams “how lonely does it get?”
Hank Williams hasn’t answered, yet.’
And speaking of Leonard Cohen…
Skyhooks, Ego is Not a Dirty Word:
‘Some people keep their egos in a bottom drawer
A fridge full of Leonard Cohen’
(They also mention Jesus and Nixon in an earlier verse.)
Elvis is mentioned in Man on the Moon (R.E.M.)
Now, Andy did you hear about this one?
Tell me, are you locked in the punch?
Andy are you goofing on Elvis? Hey, baby?
Hey, baby, are we losing touch?
Tom Paxton’s Phil talks about the newspaper reporters who called him after Phil Och’s committed suicide “They asked about Dylan, about McDougall Sreet and Third.”
If THAT counts as “in passing” then we can talk about The Damned having a go at Television’s Richard Lloyd, Fred Smith, and Billy Ficca in Idiot Box. 
Marc Cohn “Perfect Love”
Well, they worked one summer together at the '64 World’s Fair.
They met Robert Kennedy there.
Collin Raye “My Kind of Girl”
I said how 'bout some music, you said, you got any Merle? [Haggard]
You quoted William Faulkner and Martin Luther King
You said your favorite movie star would always be James Dean
Andy Kaufman is also mentioned.
We could go on and on with this:
*The sweet pretty things are in bed now, of course
The city fathers, they’re trying to endorse
The reincarnation of Paul Revere’s horse
But the town has no need to be nervous
The ghost of Belle Starr, she hands down her wits
To Jezebel the nun, she violently knits
A bald wig for Jack the Ripper, who sits
At the head of the Chamber of Commerce
*
[…]
Well, John the Baptist, after torturing a thief
Looks up at his hero, the Commander-in-Chief
Saying, “Tell me, great hero, but please make it brief
Is there a hole for me to get sick in?”
[…]
The geometry of innocence, flesh on the bone
Causes Galileo’s math book to get thrown
[…]
Then send out for some pillars and Cecil B. DeMille
[…]
Where Ma Rainey and Beethoven once unwrapped their bedroll
Tuba players now rehearse around the flagpole
Bonzo Dog Band, “11 Mustachioed Daughters”
(Spoken) “I don’t remember so good, but I think John Wayne was in it.”
Statler Brothers, “Counting Flowers on the Wall”
“Smoking cigarettes and watching Captain Kangaroo.”
Wrapped Around Your Finger, The Police
Is Mephistopheles a real person? 
Many many examples from The Hold Steady. Here are a few from 1st 3 albums
Swish - “There was this chick she looked like Patty Smyth.
She seemed seemed shaky but nice.” “She said my name is Steve Perry but people call me Circuit City.
I’m so well connected. my UPC is dialed into the system.
She said my name’s Neal Schon but some people call me Nina Simone.
Some people call me Andre Cymone.”
Most people are DJs - “With some guy who looks like Rocco Siffredi.
And I’ve heard he’s been dead once already.”
Knuckles - “I’ve been trying to get people to call me Freddy Knuckles.
People keep calling me Right Said Fred.” “I’ve been trying to get people to call me Freddie Mercury.
People keep calling me drop dead Fred.” “I’ve been trying to get people to call me Johnny Rotten
People keep calling me Freddy Fresh.”
Stevie Nix - “She said you remind me of Rod Stewart when he was young
You’ve got passion and you think that you’re sexy
And all the punks think that you’re dumb”
Stuck between stations - “The Devil and John Berryman, they took a walk together
And they ended up on Washington talking to the river”
Chill out tent - “He quoted her some poetry, he’s Tennyson in denim and sheepskin.
He looked a lot like Izzy Stradlin.”
"The Day Before You Came" - ABBA
I must have read awhile, the latest one by Marilyn French or something in that style
Synthpop band Blancmange covered the track two years after ABBA and changed Marilyn French to Barbara Cartland
Alexa was playing 80s music last night and since I am now listening for famous people in songs…
There is a song I don’t think I have heard before called The Message by Grandmaster Flash that mentions Sugar Ray (the boxer) and Pretty Boy Floyd.
And of course, the Martin Luther (16th century religious figure and founder of Lutherism) reference stands on it’s own.
Another McCartney even puts a character in the title: Uncle Albert / Admiral Halsey
Another song with the person in the title: James Dean by the Eagles:
Ohio (Come Back to Texas) by Bowling for Soup mentions Drew Carey, Troy Atkinson, Willie Nelson and the Bush twins.
Stephen Bishop’s On and On:
Put on Sinatra and start to cry
The OP specifically asks for mentions of famous people in passing. In both of these examples the famous person is in the gol-danged title.
mmm