Soldier Boy and Cap'n are right; this has become somewhat shunted up a blind alley - my fault as much as anybody's - sorry.
It is inevitable that we discuss the clubs and their attitude to the music when we attempt to define our terms; speaking for myself, this is where I came in (The Spinners Club, Sampson And Barlows Restaurant, London Road, Liverpool, circa 1960).
I think the problem, when dealing with 'The Tradition', is that quite often we move away from the subject and inevitably begin discussing what has happened to it in the hands of the folk clubs. As I believe that the tradition began to die with the break up of the (mainly rural) communities and is now dead, I think our experience is of a somewhat distorted form of its remnents. The club experience has inevitably had an effect on out view of what is traditional (I believe tradition and folk are synonymous) - it's a little like judging Newgrange or Knossos by what they have become at the hands of the re-builders.
Cap'n touched on one example in his last posting; that of the imposition of modern standards to old songs so that no-go areas are created. I haven't personally experienced singers being told that they can't sing certain types of song because they might offend sections of the audience, though I have been told that the preventing the singing of 'sexist' songs is fairly common. I know Ewan and Peggy and other members of The Critics Group were often requested (and constantly ignored) not to sing political songs. The nearest thing to it I have experienced was in a non-singing situation where I was told I should never sing whaling songs due to our (quite correct) modern take on the brutal slaughter of these creatures.
Attitudes such as these are bound to colour our concept of folk and the tradition.
Jim Carroll