But in practice most of the enforcement will be by the licensee, will it not? If he/she thinks there may be a licence problem caused by the incidental rendition of "Flowers of Edinburgh" by the bloke in the corner with a fiddle, he is more likely to turf him out than listen to legal arguement as to "incidental" or not. This I think is the real problem.

Yes I think that it is the practical problem of first being able to convince a licensee that the activity you wish them to hold is possible.