Adapting traditional songs is as old as the revival itself.
MacColl rebuilt ballads from fragments, Lloyd was well known for the practice (Jack Orion/ Prince Heathen and dozens of others). No problem with this except, particularly in Bert's case, when he made academic claims for his re-writes. Bert edited freely many of the songs he included in The Penguin Book.
Frank Purslow re-constructed many songs from the Hammond and Gardiner collection.
Personally, while I have always enjoyed listening to completed rewrites, (MacColl's Sheath and Knife is wonderful), and have done it myself on numerous occasions, I would find the idea of copyrighting such pieces totally abhorrent and an absolute vindication of everything I have been saying on this thread
Jim Carroll