Al - I'm not sure whether I agree with you or not, because I'm not sure what you're saying the problem is. Too many young trad virtuosii?

...sit there with melodeons and fiddles with faces like they're sucking on a lemon and producing excruciatingly boring and unmemorable music...

Or too many young bedroom Dylans?

...the songwriter who has never played anyone else's songs, so he doesn't actually know what a song consists of, has played a not inconsiderable role in the demise of the folkclubs...

I have seen a few of those; encourage singer-songwriters and you will encourage the differently talented as well as the ones who deserve the attention. Coincidentally, I've just noticed that the myspace page for my beloved Chorlton Folk Club actually describes it as a venue for singer-songwriters. But I wouldn't have thought you'd have a problem with original material pushing out traditional.

As for the sour-faced young trad virtuosiii, I've never seen any; I rarely see anyone who looks younger than me playing trad anything, and I'm 47.