Surely, it's not a matter of the validity (or otherwise)of having a strictly traditional music policy - it's more to do with whether the individual concerned fully understands what it actually is and what it's grey area parameters might be. He should understand that there is no clean cut line of definition. Traditional music is not a song or a tune or an interpretational style - it's more a manner of existence and mode of transport - I mean it's more to do with how it got there and what allows it to continue to thrive, develop and progress naturally - that's the oral and 'by ear' bit - and perhaps its simplicity of form. Over sophistication itself can be a 'quick kill' factor for a potential piece of traditional music - making it less accessible to the vast majority of people who might be inspired to have a go at singing or playing it.
Any piece of material that lives among the people by unwitting election and can be performed and passed on without the aid of falsified media promotion campaigning (ie; endless manufactured boy bands, Maria Carey 'sound-alikes' and 'victims' of 'Fame Academy etc;)stands a good chance of qualifying in my book.
On the 'refusal to offer a booking' issue - he had his reasons - even if he wasn't completely sure what they were in tangible terms - Faye, I think understands this and will likely not continue to bash her sword on a rock - go gal - you're music and philosophy appears fine to me.