Tom,
"Fair enough within your terms ,"
Sorry, there is no such animal as 'my terms; we don't get to vote on our language, it's there for general communication, not personal convenience.
No more is there a 'common' meaning of the term, or if there is, nobody has articulated one so far, other than the Humpty Dumpty 'words mean what I wish them to mean'. Those inside the revival either accept the long-established one or, rather cynically to my mind, sail under a flag of convenience and take it to mean what suits their own particular tastes and interests - which is to the benefit of neither side of the argument as far as I can see, and is no way to treat a language.
One of the great failings of the revival is that those not involved don't give a toss one way or the other, or, if the need arises, will defer to the dictionary definition, as I would if I wished to interpret 'astrophysics'.
Let's leave it to the festival organisers to define our music – now, there's a thought!!!!
Years ago I attended a 'folk' festival in Bulgaria, where the stars of the event were a choir singing Bach and Handel – does that mean because that particular organiser of the event chose to call selections from The Messiah 'folk', it would automatically fall within your definition?
Down the years, what has taken place at The Cambridge Folk Festival has had more in common with what goes on at Slane Castle or Glastonbury than say at The N. F. F at Sutton Bonnington.
Here in Ireland Guinness and Carling would jump at the chance of organising a 'Guinness' or 'Carling' Folk Festival. As much as I realise these august bodies have the interests of the music at heart OVER MY DEAD BODY. This would once more leave us open to having our music being placed in the hands of the music industry and big business, as it was during the halcyon 'folk boom' days.
For me, the refreshing characteristic of folk music, and one of the great motivators of my involvement, is that I can regard it as 'ours' rather than 'yours' or 'mine'. You would take that from me and I would be left as remote from our music as I am from the compositions of Paul McCartney or Irving Berlin – in other words, you would remove the folk from 'folk' .
There is, and has been for half a century, a perfectly workable and concise definition of the term; as I see it you have several alternatives:

a. You accept it as it stands.
b. You iron out the flaws and adapt it.
c. You disprove it outright and replace it with another.

Ignoring it is not an option as far as I'm concerned, and a great deal of damage has been done to the survival of the music by those who have chosen to do so. If you wish your music to be considered 'folk', get the application form and tick as many boxes as you can - then let's have a discussion about it.
However, I might be prepared to reconsider my case if those singer-songwriters who refer to their compositions as 'folk' are prepared to allow them to be placed in the public domain, which is, by my understanding, the defining factor, – but I won't hold my breath.
On the question of copyright, I bow to your greater knowledge on how things stand within the letter of the law, but this does not explain why, for over half a century Peter Kennedy was able to persuade his singers to sign contracts assigning their songs to him, then follow this up by sending out claims to anybody who used say, a song recorded from Harry Cox or Charlie Wills (see relevant section in Musical Traditions). Or why the Dubliners attempted to copyright all their traditional material, and were only prevented from doing so by threats of legal action (see MacColl's biography, Class Act). Or why there was an extremely undignified scramble to copyright Turkey In The Straw following its appearance on a best-selling album. Then, of course, we have Rod Stewart's claim on Wild Mountain Thyme, or any one of the many, many attempts at ownership of traditional material.
While it may be true that none of these actions have any basis in law, those of us not versed in legal matters are not necessarily aware of this and are quite likely to be ripped off by the piranhas who have found their way into folk waters.
Over the last few years the Irish Musical Rights Organisation has been demanding money with menaces from publicans who allow traditional music to be played on their premises. I head recently that one excuse given was that copyrighted material 'might' be played during the course of the evening. To their eternal shame, Comhaltas Ceoltoiri Eireann first (and rightly) vehemently opposed such moves – until they were offered a cut of the cake, and then did an abrupt about turn (I see there is an interesting piece which touches on this, by Harry Bradley on the Comhaltas Interruptus/Clontarf thread .
I still find it depressing to recall some of the attitudes expressed in an earlier thread on copyright and ownership, and I see that there are another two on the boil at present.
Jim Carroll