"If it's OK for the 18C literati why not … Sharp's 'peasants'?"

Why not indeed, but in that case my question would be:

On Sharp's own definition of the non-educated peasant with no formal training and whose intellectual development is limited to the ups and downs of life and who has never had contact with anybody educated to be influenced by them etc would this be 'folk'?

And I'm not sure that on that definition it would be. Because the moment you are interacting with people from a different culture, and learning from them, even if orally not via literacy, then you are not really producing music in the sort of way Sharp outlines, are you? Or do people interpret Sharp differently?

Not of course that I am particularly a sticker for a defn., but if Sharp decides to go with it, then it is more consistent if he sticks with it, if you see what I mean.