I love this.
Yes, it's traditional, but Mark always had songs like that (Eastbound Train wasn't anything new, either), ALONG with truly outstanding songwriting. Traditional music has informed his more inventive stuff, and vice versa he was alway able to add his magic touch to traditional songs, like he does here.
I disagree that there have been less "great" songs lately. Songs like Silver Eagle, Lights of Taormina, Red Bud Tree or Seattle are among his all-time best, including the Dire Straits period. I also disagree that he's less of a songwriter than a guitar player. Just try to think of a BETTER songwriter than he is. Can you? I can't.
This track is pure fun, and I don't even care whether it'll end up on an album (along with some masterpieces, I'm sure) or not. This version is so good, it'll do it for me anytime. Holy smoke, indeed!