"What sort of effect do you think this will have on the traditional/folk music scene"
None whatsoever. The fact that there is now a course offered possibly shows an increase in interest in the subject, but surely this is a symptom of the "burgeoning folk revival" that has been allegedly going on for the past five years or so. Some great new performers will come out of the course, having said that, you have to be pretty good to get a place on it anyway, by all acounts, so how much is down to tuition and how much is down to talent?
What the course may do is offer formalised study of how music evolves, like any other musicology course. The working methods of ethnomusicology are usefull skills and help build up a good background picture, assisting with context, explaining form etc
"and on the people involved in the course"
Depends, really. Could be a great help, or it could equally be Sanitising and Commodifying as guest above says. I don't think you'll get a comfy job out of it. Some may, but I don't think there are 400 comfy jobs in folk music. What the course may do, if there is a business element, is give practical advice on performing careers, music management etc. Again, not really unique teaching.
The valuable part of the course seems to me to be the chance to work one to one with some of todays greatest performers. Concertina lessons with Aly Anderson, for example. Very useful.
Be aware that a lot of degree courses end up making you wish that you'd done something else...
"...and on the people who have decided not to be a part of the course."
Who will continue making music anyway?
"Do you think it will cause any problems, or will it just be a blessing on all fronts?"
I think it will be a good opportunity to study with some great performers, and will certainly help pass on traditional music. Having said that, if someone wants to play folk music well, they generally teach themselves off records, by playing with others etc, so I don't think this course is necessarilly a significant boon to the world of folk music in generall. Sure, it's good that it exists - kind of prooves that the music is healthy - people want to learn it, but it's value to society is pretty much the same as any other esoteric degree. I studied opera for a bit, and I'm sure the world is a much better place because of it... ;)
Good luck with it though, and have lots of fun. And ask them if they'll ever do an MA/PhD for me, will you?