I haven't had time to read the entire site, and my comments are based on UK festivals - maybe US ones are different.

I would take issue with the idea that musicians performing at festivals are "employees" - most see themselves as independent contractors. In my experience of UK festivals, where the programme and other commitments permit, most festival guest performers also actively participate in other parts of the festival in addition to their own gigs. Nevertheless it is hard work, and it is nice to have a private area where you can relax and chat to your friends and fellow-performers without having to be on-show to the audience or dealing with their well-meant questions, or simply to mentally prepare for the next performance.

If you have a large enough audience to call it a "festival", you probably need sound reinforcement, if only to balance instruments with different sound levels. Any electric instruments obviously need power.

In the UK, the idea of holding an event in the open air without any shelter is laughable. At the very least, the musicians need protection for their valuable instruments and other equipment - the audience may enjoy wallowing in mud but it's not an option for performers.

The idea that traditional performers always played for free is just not true. Many of them, especially dance musicians, were in high demand and played whenever the opportunity arose, and were paid in cash or in kind. Packie (not Packy) Byrne who you quote is quite right in what he said, and I have played with him in free sessions, but he was also happy to be paid to perform - and why not?

As a visitor to festivals, I enjoy the opportunities to buy instruments, books, CDs etc which otherwise would be difficult to find. Why do you want to replace these with flyers? I can find that on the internet.

Actually there are many small low-budget and low-cost festivals, but even they have to be paid for somehow. Most "free" festivals are actually raising the money through other means or are relying on the generosity (aka freeloading) of others. However most festivals in my experience offer good value for money. If I don't think they do, or don't like what they have to offer, I don't go.