"Okay, but what are we left with? Especially when the ICTM states its aims and objectives as it does."

well, I barely know OF the ICTM... to me, THEY are not 'traditional'... ;>)

"...how else do we cover all the possible bases of vernacular / popular music ...?"

Well, our local folk DJ, Mary Cliff, refers to the music she plays as "Traditional music...and music 'in the traditions'"...to make clear that much is derivative.

and I just can't agree with "Folk Music comes into existence only if we're prepared to make the definition less precise.." Why? Because 'folk' was once 'almost' synonymous with 'trad' to refer to the older music being discovered and refreshed in the 50s-70s. The thing was, 'folk' was too handy a word, and when people like the Kingston Trio ..etc... started popularizing it and others began writing new songs with acoustic instruments and vaguely similar themes, they found it easier to call themselves 'folksingers' ..doing 'hootenannies' than to call themselves 'singer-songwriters with folk roots'...which doesn't fit on an album or poster very well. And record stores didn't want to create LOTS of extra bins to show all the new categories....so, the word(s) were diluted. Everyone thought they knew what they meant...but those...like poor old ME...who really enjoyed the 'older' stuff more.... got fooled by many concert & LP cover and bought into stuff that was only 20-40% what we wanted.
What to do? Nothing much... you can't legislate the words people use... I just had to look harder, read longer and ask more questions to avoid pop-'folkish' music that I didn't care for. Some of it was ok, but..... ummmm....

   Just because 87.943% of everyone uses the diluted words it doesn't change the fact that there ARE differences that often need to be clarified. Classical music has pretty clear labels for lots of categories...chamber music, baroque...etc... I am greedy.... I want something similar. I am not holding my breath....