John, the first situation you described, as Barbara said, is a modulation. These things are written into the song, and the only convention to follow is, well, you just gotta know the song, and know that it's going to modulate. Sometimes musicians might agree to modulate a song where such a key change isn't written in, but unless they're having a free-for-all "battle of the musicians" a key change will be decided on ahead of time. A good example of this is "Mack the Knife", a lot of people play it in one key, others play it changing keys every time around (giving a "rising" feel each time).

In the second situation you're dealing with the fact that diatonic harmony (major & minor scales) has become the musical convention of the western world, and a lot of old music predates the "Diatonic ascendancy". The major/minor and seventh chords are derived from the major/minor scale system and as such, are a musical accretion, or perhaps even, an intrusion on Scots/Irish tunes. First rule when playing Gaelic music on the guitar, throw away the chord chart. You really have to trust your own ear on this stuff,I find most editors try to squeeze in at least three chords, when two will do, and if three go in easy, they try to add four, etc. Actually, whenever I do try to play these tunes on guitar (I seldom do because I'm not overly fond of the guitar in this kind of music) I don't try to use chords, I search for two note intervals, with occasional triads. Try accompanying a song using just the third & fourth strings of the guitar for a while. Then add on other two note "chords" using the other strings. I personally find it much more satisfying. The trick is to accompany the melody, without imposing a sense of key, or tonality, let the melody be the boss.

Frank i.t.s.