"so is this an acknowledgement that there can be new folk songs,"
Why - your train of logic totally escapes me?
What has oral and written transmission have to do with the creation of folk songs - which concerns acceptance and re-distribution?
Songs that were both orally and literally (on broadsides and ballad sheets) remained and became folk songs because the folk embraced them claimed them as part of their culture and identity.
Part of that acceptance was the remaking of them in order to adapt them to their own circumstances.
Unfortunately, literacy also helped freeze the songs in the form they were first received - this is one of the problems in discussing the effects of literacy on folk songs - nothing is as easy as it first appears.
"That isn't a hard definition, Jim. You can't expect every club in the country to have their own mini Jim Carroll sitting in the corner issuing his stamp of approval."
No I don't Bryan - I do wish you would stop misinterpreting what I have said over and over again.
Not too long ago we could go to a folk song know we would hear a song that fell within a limited range of styles of composition based on folk forms - this was a generally accepted expectation which can be heard on productions like Voice of the People, Folk Songs of Britain, and the vast majority of the Ealy Topic output.
This is no longer the case - is this what YOU are in favour of?
" a folk club is offering heavy metal as part of the mix"
Didn't say London but yes - a Scots club has offered just that.
Is the aggressive way you conduct yourself here what the punters have tpo put up at Lewes?   
Jim Carroll