Thanks to you all and especially mr Jansen from the Netherlands, who gave significant more insight on the matter with the following link ('Killer Poet'), which was originally in the mudcat-"hills"-thread, but for some reason didn't work over here. http://www.roanetnheritage.com/research/m&m/05.htm
I copied the most telling part here:
"While still being held in jail in Kingston, he began writing a poignant poem which was entitled "Roane County Prisoner." He later finished the poem, it was set to music and became quite popular after the turn of the century under the title, "The Hills of Roane County." Many Roane County residents remember hearing it played on the radio in the 1930s and 40s. The words to the song vary slightly, but the following is believed to be the first rendition."
I compared that first rendition with the Blue Sky Boys-version of 1940 and this shows indeed the "folkprocess at work": apart from some words being a bit different, the boys left out two verses out of the original eight and they radically rewrote the last verse. Reason enough to believe this song is indeed older than 1940, the radio-remark from above is another proof.
Mr Jansen pointed me also towards another area-related song, which was reportedly written in 1936, sharing a VERY similar melody (and waltztempo) in the Mike Seeger rendition some thirty years later. The song's called 'Roane County Strike at Harriman, Tennessee' and like its title suggests, it is lyrically speaking something completely different, though in my hearing another precursor to Roy Acuff's 'Precious Jewel'.
For anyone interested ... some people at the Belgian website www.originals.be have a strange habit of collecting, dating and tracing down the earliest rendition (or possible offspring) from literally thousands of songs by any genre (The eponymous book has even more). For any problemsolving on such matters, there's an English speaking forum, all access and everything free !! (but not from language errors, I'm afraid).