I think you're right about all your interpretations. I believe this is a fairly conventional renunciation of erotic poetry in favor of contemplative verse; so, yes, the "quaint follies" are definitely in reference to the "idle verse" of the title. ("quaint" is probably a bawdy pun.)
An interesting thing about the poem is that it corresponds to the convention of maturity renouncing youthful follies, but the poet was evidently still young when he wrote it (the "my youth" of line 5 is evidently in the present).
An awkwardness in the poem is that the second stanza breaks the continuity of address -- i.e., the poet seems to be addressing his "preserver" (Christ?) in "We'll make a match, my only light,/And join against their wiles" but in all the other stanzas he is clearly addressing the "follies" addressed at the outset. (The best antecedent of "their" is probably "follies.")
The title is knowingly ambiguous in that, while identifying the subject matter, it also leaves itself open to ironic interpretation as labelling the poem.
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