For one thing, because your proposed English translation omits "burada" from the original sentence. Second, "in" isn't really part of the original sentence either. I read "Köy halkı" as people of the village (ie village people) rather than people in the village (who may or may not be of the village).
Eh, no, as a native speaker I'm pretty sure it is wrong. "People" can be a countable noun, but only in the sense of ethnic or national groups, which isn't the sense used here. You can say "there are many different peoples in Europe" or "this people has rich traditions", but "the village people is waiting" doesn't sound right -- in this sentence it is simply being used as the plural of "person" and therefore requires a plural verb.