a lot of these nominations are not very close to what is usually considered 'folk'.

The problem WITH folk, is that it is music of the common people, and very good, creative, visionary stuff usually goes beyond what the common people pay attention to. So, folk genius might be simply the ability to present the songs in such a way as to express the musical theme(s) in elegant and moving ways.

There are a number of musicians who have done amazingly well with that process: Martin Carthy, Peter Bellamy, Jeannie Robertson, Ewan MacColl, Eric Bogle, Bruce Phillips, maybe the likes of Johnny Cash and Jean Ritchie...etc....that sort. I never bothered to worry about whether they needed 'genius' applied to them, but some of them had special abilities to weave the story and tune in ways that made the commonplace seem magic...and that IS a sort of genius.