I found Nerd's comments on this subject so rational that I had to check that I was still at mudcat. Then there's greg stephens' point that 'celtic' is simply a way of excluding or disrespecting English folk music. I hadn't considered this and indeed can see no evidence for it but it's worth thinking about.

Fintan Vallely,on the other hand, suggests somewhere that it's simply a way to avoid saying 'Irish'. I must see if I can find that reference. For myself I thought it referred to rather soupy and gooey (not very precise adjectives, I know) new-age type stuff. Imagine 'Danny Boy' played on panpipes.