"Unfortunately (and for perfectly valid reasons), they chose a term for it which was already in use with a much broader meaning"
No they didn't.
The term folk song has been in use since the beginning of the 20th century - so Sao Paolo took picked up on something that was in existence for over half a century already - Sharp had already published, 'English Folk Song' and 'Folk Songs of the Southern Appalacians'.
All the other forms - lore, tales, dance, custom.... were related disciplines - song was added to include an aspect of folk culture not yet covered - so the term was not "broader", but in fact, yet another factor.
Fore-runners of Sharp et al, were The Grimms, Tytler, Tylor, Max Muller, Laurence Gomme... dating back to the middle of the nineteenth century
Far from the title already in use, it was the missing piece of the jig-saw, which is why any suggestion that we should abandon a term that is accepted world-wide and has a pedigree as long as your arm for something as meaningless as "World Music"
There's a story told of a veteran fiddler who went into a music shop in Dublin and searched for an album of his own playing.
On beig told to look in the @world Music' rack, he asked, "Do you have any music from anywhere else?"
Jim Carroll