Dick, you can categorise songs in many different ways - by subject, metre, whether they have a chorus, even simply whether or not you like them. One of the many ways of doing so is whether they are "folk songs" in the sense of what Lloyd referred to in the interview as "folkloric" songs, or whether they are modern composed songs. On this basis of categorisation Dylan's songs are in a different category from Seeds of Love or Tam Lin. This is not a value judgement, simply one of taxonomy.

If you choose to use a different basis for categorisation, including one based on quality, there's no reason why they shouldn't all be included together, but that's not the point of what Lloyd was saying about Dylan (who was mentioned only once, in passing, as one of a number of examples of a particular type of performer). Lloyd's point wasn't specifically about Dylan, far less an attack on him, and I'm puzzled why you are reacting as if it were.

Nowhere in the interview does Lloyd claim that folk music (in his sense) is superior to pop or art music. What he does say is that each in their own way offers a different experience. In fact, he's rather dismissive, scathing even, towards those who despise other forms of music other than their own preferred genre, whether that's pop, classical or traditional folk.