Oops, I misquoted the statute which says that the cover arrangement mustn't change the "basic melody OR fundamental character" of the original. In any case it seems to presuppose that some arrangements and adaptaions will fall outside the terms of the compulsory license while remaining recognizable as derivations from the original.
That the holder of a compulsory license is likely to get "not much" flak is cold comfort. A serf's life may be better under a mild and condescending lord than under a rigorous or oppressive lord, but either way the serf remains a serf and the lord remains a lord. Inequality and bondage are built in to the system, regardless of material conditions. Eventually one reaches a point at which there is no substitute for freedom and equality.
"Pop" is such a broad, vague category (reaching for example to "Boston Pops") that perhaps most so-called "folk" songs could succeed as some form of "pop" song, though not all "pop" arrangements will be equally good or equally to anyone's taste.