Being more of the folkrock (-metal) chick, I would say that there are so so many nice ones that it is hard to actually start listing them.

So here are a few, with appropriate links: (Note: these are all German bands)

Thanateros - Dirty old town (I'll list it even though I think I read somewhere here that it's not really a trad, but it is damned good) They also do great versions of other folk trad tunes mixed with metal. Yes, metal folk.

Subway to Sally - Krähenfraß (the Twa Corbies translated into German) and other songs; Haughs o'Cromdale, Julia und die Räuber (German trad), Carrickfergus (also transl into German).

In Extremo - make medieval/folk metal/rock with versions of traditionals from all over Europe. On their latest CD is "Follow me up to Carlow" with a 3 bagpipe-edition included.

Fiddler's Green - is a folk rock band with lots of Irish/Scottish folk rocked up. Have a killer version of Queen of Argyll, plus other songs like Matty Groves, Lanigan's Ball, Tullochgorum, As I roved out, Blarney Roses, Fiddler's Green (duh), Little Beggarmen, Market day, Rockey road to Dublin, Rose of Ballymore etc etc etc.

And as a side-note; there is something called Kölschrock (Colonian rock, I guess that would translate to), where traditionals (Irish/Scottish) are frequently being translated into German and played during the karneval-season here. The most famous Kölschrock band have been working together with Wolfetones. (Btw, I abhor Kölschrock.)