Richie,
If something is in public domain and it can be proved (which it can easily in most cases) then anyone can copyright an ARRANGEMENT which prevents anyone else copyrighting that arrangement. Dylan, as far as I know, has only copyrighted arrangements of songs and if anyone else sang what can be determined as their own arrangement Dylan would not be able to sue successfully (in theory).

Of course if you refer to morals then anyone who copyrights a piece they haven't bought or written is immoral.......unless, as in some cases the publisher insists on the song being copyright as a matter of course, and some editors copyright traditional material simply to prevent some other unscrupulous person from doing the same and making money from it. I know because I have experienced this in my own editing. The material was copyrighted but inside the book it states clearly anyone can use the material without permission for non-commercial purposes as long as sources are acknowledged. This can also be stretched to small runs of CDs etc. This may have been the case with Arnold.

All of the material on the Yorkshire Garland website is freely available for non-commercial or educational use with acknowledged sources, and where the song has a known writer the writer's permission is sought.