I may not know much about art, but I know what I like.....

Folk music is folk art, it isn't an 'artist' who is entertaining an 'audience', but a bunch of folks entertaining each other. If someone sets out, through crass stupidity or sick humour, to upset someone else in the gathering, then that offended someone is just as entitled to upset the offender.
I've never seen a professional singer displaying a shirt that is deliberately provocative, and if I saw someone with one, then I would try to get up next and carefully display my (ordinary) shirt and make a comment how nice it is. The audience reaction would no doubt send a clear message to offender and organisers.