"What it fails to take account of is that folk clubs of any description are first and foremost where people go for entertainment, not academic study. "
I've never challenged that Howard, I know it to be the case, if for no other reason that this is why I became involved in the first place - God bless the Liverpool Spinners.
Where academic study came into the picture was in that work that went into amassing and making available the body of work on which the revival was given a basis - By Sharp and his cronies, The Library of Congress, and later, by the B.B.C. collecting project.
It was the results of that which drew us into the unique music we/they/I call(ed) 'folk'
When that base dwindled to the point of almost non-existence, the term 'folk' became meaningless on the club scene.
If the Royal Opera House began presenting 'Starlight Express' and 'Cats' as opera because Aida wasn't putting enough bums on seats, how much integrity would it be left with - I'm sure there would be a team of officianados (and accountants) ready to argue that because opera is largely sung narrative, both of these could be regarded as "new opera".
I agree with you totally that much of this can be traced back to the folk boom, but even Dylan, a somewhat shrewd businessman, drew a line in the sand and moved on "It's All Over Now, Baby Blue" - sadly, many of his followers didn't.
Some of what Dylan and his ilk were producing in the early days could be traced back to folk forms '50s rock nights' most certainly cannot.   
"a song has to be passed around 'orally' that makes it folk music"
That has never been an argument and it isn't here.
I've always been aware that prnt has played a part in the transmission of the songs, in the latter days, an essential one.
How the songs are passed on is immaterial, all the other points I outlined about them being taken up up to the point that they no longer belong to any particular individual is the bit you have either missed or ignored.
"Jim, if you joined us in the 21st century, you might just find that the process you describe above is still happening"
It may be happening among the folkie Freemasons, but it is not happening among the folk, who have become passive recipients of their culture.
What they receive will never belong to them - especially when it comes with a little (c).
Jim Carroll