Seems to me folk can either be a sound, with identifiable stylistic parameters, or it can be a set of historical texts that either whither in an archive or are re-invented in each generation's own image. I have difficulty with it being both without becoming simply a genre - the folk revival genre - that has arbitrary rules like any other popular type.
I see hyphenised folk as a way of assimilating the revival 'message' for a new audience, which for some will feed back into the tradition.

There is a genuine thirst for traditional music that bands like Bellowhead exploit (in the nicest possible way) among people who want folk music but don't or won't buy into the negative signifiers that surround it.