All this comparison of acoustic and electric is very interesting, but the question posed in the OP wasn't which is better, but this:

Can we now have a go at analysing why a new generation of young kids
are still being brought up with the smug propaganda
that Acoustic is morally superior to Electric...???"

This demonstrates the logical fallacy of unfounded premise. In fact, it's complete bollocks, given the number of young people playing rock and hip-hop. What, a bunch of young people that punkfolkrocker happens to know are being snooty about electric instruments and he thinks that means there a lot of young people who feel that way, and that some group of older people is making them that way? In the real world, young people playing acoustic instruments are about as common as old people playing acoustic instruments -- a distinct minority.

And the reason this is happening even amongst that minority who play acoustic? As this thread demonstrates, some people just like it better. It's not really a conspiracy. Or even a movement.

But getting back to the comparison between electric and acoustic as they pertain to the definition of folk music, I find it interesting that some people would argue both that Steeleye Span plays "real" folk music because it's mostly traditional and that Steeleye Span doesn't play "real" folk music because it's not aoustic.

The fact is that there are two very different definitions of folk music, one that is based on process and longevity and another that is based on sound and feel. The process-based definition can and must encompass electric renditions of traditional folk songs. The sound and feel definition can't, because part of the sound and feel is the fact that the music is acoustic.

Sorry, that sounded simplistic and like it was trying to be a clear definition. Really, there are no lines in the world, no black and white. Everything is in shades of grey.

John P

P.S: my music room contains two acoustic guitars, an old Martin tenor guitar, an electric guitar, a mountain dulcimer, a Celtic harp, an electric bass guitar, an oud, a couple of synthesizers, a Chinese yuan, an electronic drum machine, a lute guitar, and a large pile of hand percussion.

There is no "better". There is only different.