"Mainly because we've got this word 'folk', and most newcomers aren't likely to know that it can mean two almost completely different things. "

Why only "two" completely different things? Do you feel a blues song and an old English Ballad and an Italian folk song are the same? Industrial ballads, logger songs, songs of the George Sea Islands, Mexican folk tunes are all "folk songs" by that 1954 definition - but saying "folk" does not describe anything.   If you recognize that "contemporary" folk songs spring up from a contemporary community and fit most of the terms of that definition - with the exception of recognizing modern transmission methods - you have "folk music". That does not make it traditional.