I know that Kelly & my Prince theory is wrong because I was told that Jon blatantly stated at a Runaway tours thing that this was about someone who worked at the Soul Kitchen and he even got choked up talking about it, but I'll give you the Prince run down anyway just so you can have a little insight into where we were coming from.

Heavy is the head that wears the crown (The pressures of stardom)
All the people came to hear him speak from miles around (Massive star, people did come from miles around to see/hear him)
They hung on every word a song in every sound (His lyrics and his music were fascinating and you could describe his music as "a song in every sound because of the complexity and the innovation of his work)
Heavy is the head that wears the crown
He touched the sky to light up all the stars (his death)
He could snap his fingers and catch lightning in a jar (being a hitmaker/keeping a loyal audience for decades)
I am you and you are me and we are who we are (Jon could relate to Prince because they both were longstanding songwriters/musicians/artists)
Touch the sky and light up all the stars

All hail the king whose castle's falling down (If Prince's castle isn't falling down right now, whose is?)
The paper prince who wears a cardboard crown (His name literally was Prince Rogers Nelson. His birth certificate, paper, made him a Prince and the cardboard crown could refer to CD jackets that made him a Prince among artists)
Poor man has his money
Rich man has his gold
All hail the king whose fortune is his soul (When you die, the only fortune you have left is your soul)

He climbed the clouds to heaven's highest hill (his death)
When you get that high (his alleged addictions to pain pills)
The earth below looks just like a blue pill (again, a reference to the pain medication)
Gave wind to all his horses and to all his men good will (Prince was a religious man and he also wrote songs related to Revelation and these two lines could refer to those images of the 7 Horsemen)
When he climbed down from heaven’s highest hill

All hail the king whose castle's falling down
The paper prince who wears a cardboard crown
Poor man has his money
Rich man has his gold
All hail the king whose fortune is his soul

He breathed his last they laid him in the ground
False prophets spoke of riches and said all hail to us now (People coming out of the woodwork to stake claim to his fortune and his publishing rights because he didn't have a will)
The faithful wouldn't listen and they never would bow down (His fans are still standing behind him)
He breathed his last they laid him in the ground

All hail the king whose castle's falling down
The paper prince who wears a cardboard crown
Poor man has his money
Rich man has his gold
All hail the king whose fortune is his soul


So, even though we're wrong, this is one of those times--as Jon has stated--when the listener could take the lyric and REALLY make it their own.