Folk tunes have been used to create Classical style pieces and classical pieces have been used to create Progressive Rock (Keith Emerson does it all the time) so a folk tune could end up anywhere!

The act of setting down the tune in dots that are then slavishly adhered to is what ruins it for me.

If you read Yehudi Menuin's autobiography you will find that he admitted to finding improvisation very difficult.

I am convinced that there is a learned skill in playing by ear that is distinct form the abillity to play from music, however good the musician is technically. This was always apparent at concertina weekends where as a finishing session we would all play together. There were those whom I know to be excellent dot players who could not play simple folk tunes as they did not have the dots in front of them. Over the years they got better at it, presumably realissing that they needed to develop the skill and attempting to do so.