I admit my attempts to draw parallels between the text of "Lola" and folk songs were simply being naughty, and my argument for admitting into folk clubs is specifically about Swan Arcade's folk-style performance, I wouldn't admit the Kinks' original version because their style is incompatible with what you expect in a folk club

"folk songs are in the public domain". True for traditional songs, but not for "the rest", which you've agreed were part of the clubs you were involved with. Once you admit modern composed songs it is then a question of taste where you draw the line. If you want to draw it tightly around traditional song and songs which sound just like them that's your prerogative, but many people who take an interest in folk are willing to take a broader view. What they do expect is that the songs are presented in a style which sounds "folky".

What I strongly disagree with is that these somehow present a threat to traditional songs, when my experience is they can sit perfectly well alongside them, as they have done from the early days of the folk revival. When I go to a folk club I don't expect to enjoy everything I hear, but my enjoyment is based far more on the style and quality of the performance than whether it is a traditional or a modern song, despite my tastes leaning strongly towards traditional music and song.