Well--- the 5-string banjo *is* diatonic, to the keys of G and C
basically. Hence the capos.

And bluegrass is an artifact. It has as much (or little) claim
to being 'traditional' as does Benny Goodman's music. It's the
invention of a few musical geniuses who happened to be at
the right place at the right time--- when banjos went from
semi-decent junk to Mastertones and Tubaphones and guitars
went from questionable Spanish copies to C.F. Martin's D28s.

The only thing that makes it traditional is the same thing that
use of the B/C accordion for Irish music 'traditional': The current
players are too young to remember the guys who invented the
method of playing the instruments.

So anybody that says that an instrument is or is not part of the
Bluegrass tradition is full of shit. There IS no 'Bluegrass
tradition.' Doesn't make it any less fun.