Even though Jay E. has got into quite a bit of trouble, and has been in conflict with the police, he’s never had to go to jail, he’s always got away relatively unscathed.

After a conflict, Jay is quick to leave; probably because he’s so wanted by the police for other things he’s done.

This is a reference to the Kennedy assasination and a continuation of the previous line.
Even though he claims to have Kennedy in the blood line, in stead of being shot in the head like Kennedy, he’s the one doing the shooting.

Jay’s haters are actually exactly like him; but driven by jealousy of him.
He claims to have ‘created’ them, because they are only around because he is famous, and they have got by on hating on him.

This is a double entendre.
The first meaning is that he’s an insomniac, and that he’s always trying to ‘count sheep’, a common remedy to try to fall asleep.

The second is that he’s fighting for the ‘sheep’, which is a term for people who are easily influenced, and naive. He’s saying that he’s fighting for these people to become educated, so they don’t become mindless supporters of the government.

This continues the previous line. Although he’s threatened by death he isn’t scared in the least.

To ‘walk the line’ is to partake in risky endeavours, and to not be scared, so he isn’t scared by the people or things that threaten him, so he lives freely. He uses a reference to the Johnny Cash song, I Walk The Line to drive this point home.

http://www.youtube.com/watch?v=k7K4jH7NqUw

This line is a comparison between his treatment of his opponents, and the common anti-religious practise of burning the bible.
Much like people against Christianity burn the bible, Jay is burning his opponents.
This is also a continuation on the previous lines, about authoritarian practise and the likes, because many authoritarian states — such as Nazi Germany — had ordered the renunciation of Christianity, usually by encouraging bible-burning.

Instead of being his own producer, Ringo tells Jay to leave the record scratching for the behind-the-scenes mixers, and just do his rapping.
This line references Frick and Frack, a comedy skating team.
Their names have became contemporary for people who are fairly insignificant or jokers.

Jay mixes his name with the name of infamous Adolf Hitler.
He turns it into ‘Jaydolf’, because Jay is his first name, and ‘Spitler’, because to ‘spit’ is to rap.
He uses this analogy to say he’s killing everyone in the rap game, but instead of needing a whole army, he’s a one-man militia.

Jay uses a martial arts metaphor to assert his dominance over other rappers in the game.
A ‘sensei’ is the master of the dojo, the most proficient martial artist. He likens himself to the sensei, and says the other rappers are significantly below him, bowing when he enters the room, like a sensei’s subordinates have to, traditionally.