Tom,
As usual, from my point of view, and I know from past experience, not from yours, no confrontation intended, frustration maybe (hand on heart Joe).
I believe that the success or failure of the music depends on being clear of what you are trying to present and presenting it in an honest and open manner and to the best of your ability so that it can be appreciated and enjoyed at its best (and stand or fall) for what it is. This does not preclude experimentation, adaptation, changes, whatever... in the music, as long as it is recognised that, whatever its origins, once those changes go beyond a certain point and it loses its function, it ceases to be folk. Experimentation can only work if the end result doesn't choke the life out of the mother plant, as I believe has happened here. If you want evidence of this, look through the threads and seek out those who find an evening of folk music 'boring', or whinge about 'long ballads' (we even had an organiser of a 'respected' club proposing a three-minute moratorium on the length of songs performed, thereby wiping out virtually all of the ballad repertoire).   
"John Denver is understood as folk music by millions of people,"
You continue to say this (I think the figure you gave last time about the misconception of what is and is not 'folk' was in the region of 6o million) without presenting any evidence. If a minuscule fraction of this figure knew, thought they knew, or even cared what folk music was we'd be in a different ball game. The fact is that all but a tiny handful of people even have an opinion on the matter, that tiny handful continues to shrink at an alarming rate, and will go on doing so until we get our act together.
The decision of what is presented as folk music (or any music) has to be made by those who, by calling their music 'folk' take responsibility for it.
Far from Al's point that it was the 'purists' who did the damage (they were always far too much of a tiny minority to have an effect on anything) it was at the point when it became possible to spend the night in a folk club without hearing a folk song that the mass-exodus took place; the final crunch came with the abandoning of standards - I really was there at the time it happened, took some part in the debate and finally went off and worked on another aspect of the music. Over the time I have been involved I witnessed the rise, the limited success and the decline of the music - just as, more recently, here in Ireland I have seen the rise and what I believe to be its long-term establishment as an art form.
I have no intention of attempting to dominate this thread, but I felt I couldn't let it pass without restating my opinion on what has gone wrong in the clubs - to me, all this is just resiting the deck-chairs, not finding the leak and blocking it.
Jim Carroll