The latter instance is covered under 'occasional and spontaneous performances' while performing members submit a standard, typical or average set list under the gigs and clubs scheme.
But yes, as we've said above, the whole problem with sessions and singarounds is that no-one's even thinking about writers or copyright, and certainly no-one's taking notes. I think it's right that not many people in PRS understand folk music, but some do and they do want to get it right - they have a legal obligation to do so in fact. But they have to have SOME system that won't break the bank, and that's why they currently operate a catch-all policy.
Now, maybe the price needs to be set lower in some situations, in recognition of the fact that a percentage of the work will be in public ownership (though as I've said, setting that price will not be easy). I think the current view is that most trad material will be registered by someone somewhere as an arrangement, so it's all treated the same as copyright, but I'm unclear about this bit, and need to make more enquiries.
They do, however, admit it's a compromise, and that the system may seem unfair to some people in some situations - and they ARE just starting a major review of all this.
The alternative would be to demand accurate records from ever club and session, which would be a major pain for participants, plus it would hike the admin costs to such a degree that there'd either be no money for writers, or the fee would have to rise dramatically to cover it. Which option would people prefer?
As for making contributions, I guess that would be a matter of forming new habits. Perhaps it could just become good manners for singers and players to pop 50p in the ashtray for the 'people whose talent they're borrowing,' as a friend put it recently. And hat-passing might pick up a few more quid from others round the room.
I personally see it as a matter of respect for writers, rather than as some authoritarian imposition - though points about PRS contact with licencees etc. are noted (and, I've heard recently, noted by PRS themselves, too).