If the quality of the video this old is surprising it's because it was filmed by a professional documentary producer, David Hoffman. It was shot in 1964 just after Lyndon Johnson had declared his war on poverty and very little was known about Appalachia. Hoffman went on to produce 88 prime time documentaries for PBS.
One would think this dance was rehearsed and produced by somebody such as June Taylor but Hoffman explains that this is just a "roll back the rugs" dance in someone's home. He was so awestruck he tried to dance with the camera. The irony of Johnson's war on poverty was it targeted the most self reliant segment of the country"s population. They didn't take the bait and showed their gratitude for Johnson's solicitude by becoming Republican voters and VISTA was forced to shift its attention to impoverishing urban America where it found a ready supply of welfare clients. Looking at the dancers does not conjure up images of poverty. Sure they were wearing the best clothes because they knew they were going to a dance and may have known it would be filmed but these were not poor people. Using criteria such as availability of electricity and running water and per capita income are poor indicators of poverty when the population has spent 200 years learning to get along without them.
Bluegrass, like jazz, still demands instrumental virtuosity. It is it the folk music of the Scotch-Irish who populate Appalachia. The term Bluegrass is recent and was popularized by Bill Monroe who never lived in Appalachia but learned the music from his uncle. Monroe was born and raised in Western Kentucky, in Rosine, not far from Owensboro where they actually have blue grass but few Scotch-Irish. He was first to discover this young man in the video below. Monroe owned a minor league baseball team and hired a pitcher from Eastern Kentucky, Dave Akeman. Later he learned the pitcher could also play a banjo so he nicknamed him Stringbean and moved him to the band. As luck would have it, Monroe also happened upon Earl Scruggs who popularized his technique of banjo picking as opposed to flailing or strumming.
Before the Hoffman documentary a few examples of bluegrass had begun to appear on local television in towns such as Wheeling, West Virginia and Roanoke, Virginia. Don Reno and Red Smiley even had a well known sponsor, Kroger. Prior to that it existed on the AM radio band. The Carter Family, although never billed as bluegrass was one of its best acts. Wildwood Flower was an old song long before Maybelle Carter discovered it. Notice the "claw hammer" guitar technique the family uses.
I would guess that there is a zero percent probability that Bluegrass will ever become as popular as country music for the simple reason that the performers are not interested in modifying their music to conform to popular tastes. They play by their own rules. No amplifiers, no drums, everything is acoustical and vocals are okay but merely an embellishment. I suppose it parallels with jazz in that the idea is to make music not money. Yes, a few do become wealthy but scores of little known groups travel from festival to festival in fifth wheel campers, performing and selling their cd's. I have been assured by someone who plays country music that very few country musicians could make it in Bluegrass. Vince Gill and Marty Stuart could but the list ends about there. I'll close with a video of Rhonda Vincent and the Rage, a group so demanding you apparently have to marry into it. Two of Vincent's musicians are son-in-laws.