It's very true that players and singers who are used to other genres of music often play/sing in a manner that's very competent but not appropriate to the music. But the reason they play in a "non-folk" way that jars slightly is not because they're too good or too clever or even too well trained, it's because they're using techniques that are not best suited to the music, and haven't yet learnt the new techniques that would work better.

I think this is an important point, because there are quite a number of folk singers and musicians who appear to believe that it's dangerous to try to improve or to apply any sort of formal learning to their music (e.g. learning to read "the dots", or attending a voice or instrument workshop). They seem to consider that their natural and untrained way of playing/singing is something precious that they'll lose if they start thinking about in analytically, and yet too often they are simply performing in a lazy, slipshod way that has no particular charm or merit. But there's nothing to lose and everything to gain from examining the way you do things and trying to learn to do them better. If conveying emotion and the sense of the song or tune are the important things, then you can learn how to do them more effectively.

Yes, the extreme "virtuosos" can be irritating and leave people cold, simply because they've got their priorities wrong. The singer with the "oh-what-a beautiful-noise-I'm making!" voice but no feeling for what the song is about; the guitarist who over-embellishes a simple song to the point where both the lyrics and the melody are overwhelmed with fancy riffs and twiddles; the session player who keeps on doing show-off individual pieces with way-out chord sequences that no one else knows and can join in - they're all just missing the point of it all. They're not "too good" - they're still not really good enough, and could be so much better if they realised how much they had still to learn.

Marje