On the one hand:

If "non-traditional" instruments had never been allowed to take part in traditional playing, a whole lot of the instruments we currently consider to be "traditional" would never have come into use. The Irish bouzouki is an obvious example, but even the ubiquitous guitar is a relative newcomer to virtually all varieties of folk music. I know for sure that the banjo was invented in the US relatively recently, and if I'm not mistaken, the various squeezeboxes are of even more recent vintage, as products of industrial-revolution technology. When played tastefully by a competant musician, almost any instrument should be able to fit in -- and may even eventually become "traditional." (The pedal steel guitar is a current-day example.)

On the other hand:

Blowhards and egomaniacs can ruin everyone else's experience wielding almost anything that can generate a moderate to excessive amount of decibels. An "acoustic-only" policy seems like a reasonable and (more importantly) unambiguous ground rule, but it does allow badly-played homespun percussion instruments while excluding amplified instruments that *might* be played appropriately and, indeed, delightfully.

The single exception of the electric bass to the all-acoustic rule seems very reasonable. More bass players own electric than acoustic basses, and are accustomed to keeping their volume at an appropriate level to fit in with an acoustic jam -- after all, they are, by definition, accompanists.

This exception should *not* necessarily "open the door" to all other electrified instruments, but I suppose that might be difficult to explain.