It was pretty genuine to the music, which I thought was the best selling point. Parodies are best when you stay as close to the true nature of the subject.
Guest says he hates to the "mockumentary" term because he says he isn't really mocking anyone. Guest is also a bluegrass musician in real life, so I don't think this movie was meant to be a "look at the wierdos" thing. He merely cast a light on something of which he has intimate knowledge, and I suspect he steered the actors to maintain an innocence so the film wouldn't betray any 'wink wink' perception and break down the fourth wall.
PROBABLY his second best film after Best of Show, which was so earnestly put together with such strong characters, it's one of my top 20 films of all time.