To be fair, I've not really known the term to be used in respect of truly(depending on how you define it)traditional music or songs.

However, we never really used the term in our circles when referring to songs(or tunes)written by others either.

I don't recall anyone in a folk club even saying "I'd like to do a Bob Dylan cover". Mind you, his music seemed to encourage more "clones" than any other back in the day. However, most of the time, it was the song itself which was the important thing with singers and musicians usually interpreting it in their own way as opposed to slavishly trying to copy the original.

Having said that, we've all gone through phases of trying to emulate some of our favourite musicians' playing styles and so on. However, we don't necessarily try to imitate every singer or musician on each and every song.

As TB suggests, I think of a cover as being an attempt to either copy the original or to try and sound as close to it as possible. Also, it's an attempt to "cash in", in many cases... I believe the term originated during the days when sheet music sales predominated where you might get several artists recording, performing..i.e. "covering" a particular song. It was also very common in the fifties and early sixties where almost every American "hit" used to be covered in The UK. Most of Marty Wilde's records, for instance, were cover versions.

Of course, I'm maybe just making a fuss and being a bit pedantic about the use of the term but I don't really think of "folkies"(in the broad term) and trad musicians who play and sing music in clubs, pubs, or at festival camp fires as performing "covers".