I wouldn't use the numerical notation (I, IV, etc.) in a lead sheet.

The only time to use a harmonization of a passing note is if it was essential to characterize the arrangement. This wouldn't be done so much in harmonizing basic folk song material but more in jazz tunes. Diminished seventh chords are useful to harmonize passing notes here.

Essentially, simple harmonies are preferable in basic folk tunes. I would eschew any chords that weren't major triads, dominant sevenths or minor triads (as in use for relative minors).
In a blues song, a IV7 would be acceptable.

Let the guitarist decide if extensions of the basic chords should be used and where.
Keep the chord progression in folk tunes basic and simple.