I have read your banter backwards and forwards with interest. I am a teacher of the deaf and teach music to them and I teach all sorts of kids 'folk' music - last year someone said to me - "do you know what the definition of folk music is?" and I had to confess that although I could name folk songs etc and I could describe tradional music I couldnt give a 'good' definition of folk music. Their definition appealed to mefolk music - is music sung and played and enjoyed by folk whatever their age creed or colour.It is the music of the people for the people what ever shape, form or sound it takes.
I take a lot of well known rhymes and songs and change the words too. The kids often enjoy the fact they know the tune but like a more relevant/modern or funny slant. I also try to add actions or the use of beaters so that the kids have something to do in songs. As for crowd control - set out from the start that when you say a word ( pineapples seems to work well)or do an action that every one has to be quiet or put their instruments down. The kids just want to have fun and enjoy music. My own kids have never been forced into traditional folk but I frequently hear sea shanties and traditional songs hummed and sung whilst they are playing and my two youngest intend to put on a 'show' of tradtional song and dance for their mum this Friday.
Music shouldnt be precious it should be fun after all it is still soul food!