Guest Jason, I believe you hit it bang on. There are the cultural differences you mention. It gets even more complex when you throw in the word "traditional" both sides the pond. There is traditional bluegrass and newgrass. There is Irish traditional music and Irish folk (which is more singer-songwriter oriented, like American "folk" music is often considered to be).

And the hair splitting can go on ad nauseum.

Also, this list is pretty much dominated by British, Celtic, and American singer songwriter types, with a few blues, old time, bluegrass enthusiasts thrown in for good measure, and doesn't lean too heavily towards the traditional or "purist" end of the folk spectrum. And there don't seem to be many posters here who know much about the many ethnic folk musics of the world here (with wonderful exceptions, of course).