I think you should distinguish the folk movement and folk music. The folk movement is I think inclusive which is why I get so cross with clubs that refuse to let people they don't think are good enough play, or stop people joining in.

Folk music however is (to summarise) of unknown authorship, and handed down and modified by oral passage. This doesn't mean it is "better" than other types of music. It's just what it is. Other stuff in the style, or using similar instruments, is not folk muisc until it falls within the definition.