don't know where to start here, don't care about the flag thing, but FOLK MUSIC, that is a different story.FOlk Music is NOT singer songwriter crap, though they have to some degree co-opted the term.
Folk music is roots music in relation to singer songwriter crap, and also rock and roll, and blues. (though blues afficianados will probably not acknowledge any debt or relationship to folk) Country blues, delta blues, bluegrass, rockabilly, country western, skiffle, all can be taken back to folk music in some way, in my opinion, but I won't track it all out for you here.
'O Brother Where Art Thou' is both a horrid, stupid, insulting, ridiculous, abomination of a film, totally worthless, not funny, and offensive, & the soundtrack is not much better, but it is certainly NOT folk music, nor roots music. It is countried-up, marketable music. Why not have used the original period recordings of 'Man of Constant Sorrow', and the like? Because you can sell more cds and videos using current country stars, that's why. God bless Ralph Stanley, and 'O Death' is a powerful song, but the use of it in this film is almost as egregiously offensive as the use of Nusrat Fateh Ali Khan's Qawwali music was in 'Natural Born Killers'. There should be a special circle of hell reserved for the suits and the idea people that came up with both concepts. (Except there sadly is no hell, forgot. I think the most powerful curse you can say to someone is 'May what you believe in be real.') Save your money on the 'O Brother' cd, and find the orignal sources that they parodied and sullied. Bill