You're assuming that there is enough accommodation in Whitby for all the new participants that the expanded fringe will attract, and enough venues to put on all the new events. I'd say that finding either will be difficult, especially when Folk Week coincides with the Regatta. And any economic benefit to Whitby will be marginal.
I'm not suggesting there will be much if any expansion. WFW will contract and the fringe will expand, both rather slowly. Hopefully a balance will be maintained.

The new venue for musician sessions was going well when I sat in on Friday afternoon, Jim and Mu Wilkinson's grandbains running a pop-up bar on Skinner Street. Couldn't get a seat in the Ship on Thursday night's session.
Both of those are part of the fringe which I've been saying should be welcomed. WFW could have made the Ship session official at least ten years ago, they obviously don't want to be associated with it; the Ship sessioneers probably don't care. The Eurosessions did want to be part of WFW but were turned down. By now, we've got used to doing it our way, which works very well, and there's no point in forming any closer link.

I'm puzzled when you say that the morning workshops and activities don't contribute extra custom to the venues.
The most extreme example I can recall was a workshop on Northumbrian music a year or two ago by Joey Oliver, 10am at the Fleece. Queues outside, presumably because the licencing laws prevented the Fleece from letting anybody in earlier. Then a frantic scramble to get seats, after which nearly everybody was so wedged in that getting to the bar was out of the question. WFW could have seen that coming.