Yah, it can be cheating to a degree. It depends entirely on your personal value system...or if you don't want to be reminded of ethics, then you let your "people" take care of it.
For example, if you write some new words to a traditional tune, you can usually say "words and music by Joe Blow". Generally you'll get away with it and only the odd folkie purist will notice. Or you could credit it "Lyrics, Joe Blow, tune traditional, and note who you heard doing it originally. Fewer royalties that way, but if you're a rising star, it gives you a chance to credit, say...a Martin Carthy. (remember the "Scarborough Fair" unpleasantness?)
Had Dylan credited, say Paul Clayton, Domenic Behan or Dave Van Ronk, he would have made a few thousand less, but gained a tremendous amount of respect from a few hundred "nobodies". In the long run, the "nobodies" don't go away, but the agents and the pop music fans do.