These are all valid points, and it pays, I think, to be aware of them whatever our personal feelings might be. Folk is a broad church, but its foundations aren't Traditional Song as song as such, rather the foundations are built on Traditional Song, or at least a notion of it. A crucial difference or unseemly semantics? Well, as Richard & Don Firth have pointed out a Folk Song Singer is a different from a Singer of Folk Songs, though the nature & significance of that difference will differ from Folkie to Folkie and the church is broad enough to accomodate that.

In terms of General Folk Faith, I think we can safely say there are no Folk Song Singers extant ('...you're all post-revival now, Sunny Jim!') and just because no latter-day land-lubbing shanty singer has e'er merrily tossed with his shipmates upon the high rolling briney, it doesn't mean they can't enjoy a merry blow-boys-blow even though high-but-seldom-dry in their local Designated Folk Context.

Personal Passion is the key here. I have an especial fondness for poaching & fox hunting songs, even though my Hunt Sabbing days are long past, and I haven't poached since 1999 when I went out with my borrowed air-rifle in the early dawn shooting rabbits on Brancepeth Castle Golf Course (the three I shot were well myxed so I gave up).
My favourite ever Folk Song is about the hunting an (innocent) hare; I especially like to sing it to myself in Norfolk when I go out hunting hares of a crisp spring dawn with my camera (Then up she springs: 30th March 2012. Even when I sing it with my wife (as a shimmering psychedelic drone, hem hem) in my heart I'm out there midst the the freshly torn furrows of Tatterford; this is now Folk works for me personally, like. You don't have to have lived through the horrors of the Trimdon Grange Mining Disaster of February 1882 to be moved to tears by even the most inexperienced floor singer singing Tommy Armstrong's Trimdon Grange Explosion.

Spleen said earlier about connecting with the human spirit. Can any of us Singers of Folk Songs sing any old song and remain unmoved by it? Surely the whole act of learning a song is a ritual act of pure communion in which we assimilate our very souls with something wondrously ancient in an act that is, primarily, about personal catharthis. This is a very different thing from thinking that by singing these songs were carrying on The Tradition. I don't believe we are - we're just part of a small elite of Singers & Enthusiasts for whom the old songs live in our hearts regardless. It really is a matter of love & keen enthusiasm, and at times, I grant, that enthusiasm maybe in dire need of a little curbing (guilty as charged) but mostly I'd say things is just fine. I recently added the controversial (see separate thread) Fakenham Fair to my repertoir after a wander a round Morrisons in Fakenham in a possession of the Genius Locii, and I'll sing James Armstrong's The Kielder Hunt in a similar spirit.   

The bottom line here is that people sing this stuff and they love singing it. Sure, we can rant all we like but as soon as we're in the Folk Zone all the theory falls away and you're right there, happy as Larry the Sand Boy, joyfully communing with the wonder of the thing, be it on stage, in a recording studio, in your local singaround or session or out in the fields. There's no hierachy of pure joy I'm sure, and it pays to remember that a) this why we do it and b) this is what Folk Music (really) is.