S. R. Faruqi:

Askari Sahib has read the first portion of the second line as pānī bhī de hai phūñk sabhoñ ko , which apparently has an affinity with Mir's faqir-ness. But in this reading the bhī is unnecessary, because to breathe on water and give it to people was a common practice of venerable persons. In fact, I too have seen Hindu and Muslim women and children standing outside mosques, in order to have water breathed on by ordinary religious and pious people. Thus there is no need for the bhī .

In truth, the line is correct in the way that it appears in many manuscripts, and the way that I have given it. It was the practice of Sufistic Muslims, especially among the Chishtis, that at night they kept nothing in their houses. It was the custom of Baba Nizam ul-Din Sultan ul-Auliya that at night, before taking any rest, he caused whatever cash and property were in the house to be given away in charity.

Some venerable elders were so careful about the arrangements for poverty that they didn't allow even water to remain in the house overnight. Thus Shaikh Abd ul-Haq Muhaddis Dihlavi has written in the aḳhbār ul-aḳhyār about Shaikh Azizullah Mutavakkil that at night everything beyond the necessary-- to the point even of water that had been kept for ritual washing before prayer-- to be shared out and given away. Thus here there's an interesting allusion, and a cultural point.

Among qalandars, the custom of shaving the chār abrū (beard, moustaches, and both eyebrows) too was so strict that even hairs were included among worldly appurtenances, and one was required to take measures to cut and shave them. Pictures of qalandars from the old days show that they had nothing but an animal-skin to cover themselves, a staff, and a begging bowl. For this reason there's the proverbial saying, amīr apne māl meñ mast , faqīr apne khāl meñ mast . Later on, qalandars began covering themselves with coarse felt [namdah] instead of skins, as can be seen in the present verse. In this way this verse also has the importance of conveying some cultural manifestations.

With regard to meaning, its excellence is that after meeting with the mirror-faced one, he commenced his wearing of coarse felt. To cover a mirror they used to use a covering made of coarse felt, and to clean a mirror, too, they used to use coarse felt. In addition, a mirror is considered to have water in it; thus between āʾinah-rū and pānī there's the relationship of a zila; there's also the relationship of a zila between āʾinah-rū and namad-poshī .

In ḳhvush kī as well, there are two layers. If we consider it to be a translation of [the Persian] ḳhvush kardan , then it will mean 'was pleased to' [pasand kī]. And if we take ḳhvush in the sense of ḳhūb , then the meaning will be 'wholeheartedly, with great pleasure'.

FWP:

SETS
MOTIFS == MIRROR
NAMES
TERMS == ZILA

SRF's discussion is full of invaluable cultural information; in SSA he has truly offered a priceless gift to Urdu-lovers of the present and future.

Note for grammar fans: The Platts' dictionary definition of ḳhvush karnā , and also grammatical common sense, would suggest that it's transitive: it should mean 'to make [someone] happy, to please [someone]'. Here, the usage seems to be 'to make oneself happy' or 'to take pleasure'-- but then we would certainly expect a postposition like se or meñ for the action in which the subject took pleasure. But Mir is being ornery (or making himself happy). We might as well just say that Mir is here using ḳhvush karnā to mean 'to approve, to endorse'; thus my compromise translation is 'to delight in'.