OP:
"Did he help enormously by being so dictatorial about 'folk' music? Or has his attitude 'damaged' folk music forever?"

Neither.

Consumers don't get "Down" votes, just "Up," and one can hardly be friend or foe to a meaningless genre tag.

Reduced to MacColl's product it's the same old story. The attitude and politics is part of the packaging and the product. If a consumer liked it they bought in.

If not... you'll never know. Maybe they went with a genuine Belafonte calypso instead; maybe they skipped music altogether and played canasta. Maybe, like the vast majority of the planet, they never even heard of the guy.