"But just how can you compensate for over two decades of lost royalties on sales? "

That is a big problem, it is impossible to accurately say what those sales would have been.

I don't know if they have anything similar in the UK, but here in the U.S. the folk-DJ community has their own listserv. If there is an issue, such as playing CD-R's, that could be brought to a community of peers, perhaps there would be less chance of this continuing.

From what I gather, you have campaigned in the folk publications and here on Mudcat. Perhaps an organized demonstration at the BBC Folk Awards, or at major festivals, might bring more pressure?