DougR: As usual I find myself partially in agreement with you and partially opposed.
I would want to distinguish at least three kinds of lyrics.
Firstly, those of the singer/songwriter. Giving those freely over the Internet can, I think, be construed as theft, unless s/he gave permission.
Secondly, there are those of the 'true' folk song, learned only through the darkest of depths of history! These are 'owned' by the general population and it would be 'theft' for anyone to claim copyright in my view.
The third group is stuff explicitly collected, and there is some need to acknowledge their work. Copyright does not seem to be to be a very satisfactory way of doing this, but it is all we have. I am not at all happy with the idea that the Child Ballads are copyright but I have no problems with the copyright residing in the learned notes accompanying the ballads.
Lastly, I would want to distinguish between the performance/arrangement and the song. I don't have any problem with, say, Martin Carthy sueing over the 'Scarborough Fair' arrangement but I don't think it gives him any copyright over the song itself.