"Let's face it: folk music (unless it's pop music with banjos or whistles) is unpopular."

I don't think folk music is unpopular. The trouble with folk music is that it can't be used to make money. The way money changes hands in the music world is through copyright, and when a song's old enough, it can't be copyrighted. Sure, people talk about copyrighting their arrangement, but that doesn't really mean much.

For example, we have a woman who plays brilliant folk guitar with us. When she's really got a song down, she does so many licks, runs, and rests that she couldn't possibly write down the arrangement. And she probably never does a song the same way twice. So how does anybody police copyright of something like that?

The result is that musicians, record companies and MTV makers can't recoup their production expenses with traditional music. That leaves the general public, especially the young general public, to assume that there must be something wrong with it.
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I believe that it's all right for a person to like what they like, but I draw the line at Gene Autry. :)