This is my stream of consciousness. Prepare for something of a ramble, probably repeating points others have already made.
As someone who can read music, but find it almost impossible to sight read something without hearing it first, I'd plonk my bum firmly in the 'learning by ear' camp. I also find it difficult to improvise tunes that I've learnt as easily as some people seem to be able to do it.
The problem I've found with music is that everyone has their own opinion of how music should be, from either single notes in a tune right up to an entire genre of music. My opinion of what heavy metal should be and what it represents differs greatly from some folk I know. Similarly, my opinion of what folk music is and should be might be completely different to some of you. But that's a can of worms to be wielded in another discussion. My point is that people will often have a different idea of what makes a tune sound 'nice', 'right' or 'wrong'.
Whilst learning the melodeon, I've always noticed a trend for more experienced and talented players to encourage us newbies to play a different way once we've learnt a tune. That's before going into whether or not the tune we've just learnt is the way they would know the tune or how they've learnt it. I'm fine with improvisation and differing approaches to different tunes, but I like it when the process is uncomplicated and I can slog it out without having to think too much about it. Chances are in a session, barely anyone's going to notice your version where you play a note differently or play that chord instead of this chord, bar perhaps the couple of folk sat next to you.
I also see no wrong in meddling with a more recent tune where the composer is still alive or has recorded it. It's obviously happened with older, anonymous tunes.
I do envy those who are able to hear bass runs, alternative basses or combined chords and can transmit them to their fingers. At the same time, I don't really see what's wrong with the typical 'oom-pah' bass/chords you'd usually expect to hear. It's nice to hear variety when it's done well and there are one or two players of this parish who do it with unnerving ease, but it's a bit frustrating to be encouraged to play like that.
Using the 'Chinese Whispers' analogy, when have you ever played it without it becoming at some point, entertaining?
My head's becoming a bit of a mess so I'll stop here, with the conclusion that there's so little that could be considered 'right or wrong' that it barely matters. There's only 'better or worse to my ears'.
Now, where did I put my empty tankard? It needs a refill.