I dont think the fact that people havent heard of Ralph McTell has any great relevance as to whether S of L is a folk song or not. There were a lot of statistics in the papers the other day proving that end of civilisation is upon us,because 90% of kids couldnt name a classical composer. but I dont think the fact that in a few years nobody will have heard of Moazart willturn "Cosi fan tuuti" retrospectively into folk music.
I think the weakness that will stop Streets of London either being,or ever becoming, folk is its quality of elevating the performer/writer/narrator into a position of fairly unpleasant superiority and isolation. Moral superiority over the stupid girl, economic and social superiority (admittedly sympathetc) to the picturesque derelicts. That isolation from the subject matter is not very folky, I reckon. Fantastic song in a lot of ways, beautifully written, easy to sing, memorable, full of striking images. But in the end coming from the "charity worker" as McGrath puts it, not the people.
But you may be right. Perhaps it is the new folk.Maybe we are becoming a sharing, caring, communal-outpouring-of-grief society, and maybe this is its hymn.