"I think this thread has pretty much established that folk clubs are presenting and preserving a lot of great songs which are not yet considered 'folk'."
Not for me it hasn't, but that's my taste, which is not under discussion.
Whether songs will become folk is a non-starter because the process which made songs folk no longer exists.
The old songs are being preserved in the clubs, the new songs are not being taken up, adapted and passed on; by your own words 'ordinary people' don't get to hear them. They remain static and unchanged, and more often than not composers hang a price tag (copyright) on them so they don't travel.
As far as 'dumbing down' is concerned your posting to me reeks of condescension - 'we gotta give the people what they understand" sorry, that's how it reads to me.
Most people certainly are not ordinary, most people are individuals with abilities, knowledge and experiences which make them/us all unique.'Other people' listen to and perform folk music - not enough of them maybe.
Jim Carroll