Can't see what the problem is, after all it's just a label. I doubt that any one goes to the Cambridge "Folk" Festival based on the title and then act all surprised when they get there and find it's not what they expected. If they haven't read the blurb or looked at the website before they go to find out who is on and what you get for your money, then they deserve all they get (or don't get).
Trying to pigeon hole music is an impossible task because even if you could agree on the labels you would never agree which label went on what. The son of a friend of mine is in an "indie" type band and I asked what type of music they played. His answer was to the effect that it had no label, and if anyone managed to put a label on it then they would stop doing it and do something else.
My philosophy is to seek out the music I enjoy irrespective of how it is marketed, and to try new stuff without any preconceptions.
PS I have never looked at any forums for "Jazz" or "Classical" or "Blues" or whatever but I bet they still get their knickers in a twist over the same semantics as us "Folkies"......