I think you may be using Parks' quote out of context. My understanding is that he was distressed that all things American were being ridiculed and dismissed as phony patriotism (especially in the way the British rock music invasion had culturally overshadowed American musicians). His lyrical concern for SMiLE was an attempt to present what he perceived as the truth about America, both good and bad. Writing about this was something he thought was so uncool that it would become cool.
Yes, I would agree with this. Certainly Parks believes it is crucial for Americans to write as Americans. His songs, after all, are riddled with American references and are highly indebted to Poe (he elsewhere described Cabin Essence as Gothic).
I didn't want to politicize my fanciful analysis of "Wonderful", but the "non-believers" could very well be something like the House On Un-American Activities Committee, destroying lives through misguided patriotism. I agree with you that Parks' lyrics are not blindly patriotic, but I believe he was attempting to address a core value that the country was founded on and the ways it had deviated from that value.
Here's where we might part ways a bit. I think that bringing in the House of Un-American Activities is somewhat of a stretch - there's not much in the song or elsewhere in the album that alludes to this sort of thing. Parks appears to interested in reaching further back in American history to, really, the origins of American mythology.
I think the lyrics of Do You Like Worms unsettles this notion of "core American values" suggesting instead that America was founded on an act of aggression and repression. This, incidentally, runs though a lot of Parks's lyrics. In Song Cycle he has a song where he brings up both Jim Crow laws and the taking of Mexican land in the same song!
To be honest, I think it is impossible to not politicize Parks's lyrics since they demand that kind of reading.
It's not surprising that only a few years later Parks released an album entitled DISCOVER AMERICA with songs about "G-Man Hoover", FDR and Bing Crosby!
Well, yes, but even in that album, Parks is challenging what we mean when we call ourselves "American". After all, the definition of American, from the point of view of the United States, typically excludes places like Trinidad & Tobago, which play a big role in that album. When Parks says "Discover America" he is calling attention to the imperial practices that are at the very core of "discovery" (Columbus's "discovery" for example, was part of an imperial and consequently exploitative mission) as well as the voices that are typically excluded in the name "America". And it is precisely these excluded voices that he calls our attention to in Smile as well.