Observer: "Revenue Cutters were manned by Excisemen of the "Waterguard" and were not part of the Royal Navy in war or in peace. For a period in the 19th Century they were named the Coast Guard under the control of the Admiralty but not part of the Royal Navy.

The Yanks are close to that. Which is what I thought when I found this as a wiki footnote for the so-called Royal Navy shanty ban. One of three citations and I haven't read the the third yet.

That leaves exactly one (1) Royal Navy source at the mo: "On vessels of war, the drum and fife or boatswain's whistle furnish the necessary movement regulator." [Lowell]

No ban. Your interpretation is just fine as far as it went but what happens if a fife &c is not available? What little we do have says we revert to the less desirable but still acceptable a cappella for the duration.

Further, your extended analysis of the merchant paragraph of the citation is good except for the implication there were no professional musicians in the merchant fleet... just singing and nothing but singing.

Again, if instrumental shanties are permitted elsewhere why the unique genre tags for the Royal Navy?

Mouth singing falls somewhere between the two but it ain't "English." Instrumental song/tune or shanty or do we need yet another entirely arbitrary modern genre label?