The thing is how far can you go with the funk at a northern night before the boundaries are pushed too far? I've heard some of the funky stuff the top dj's you are referring to have, some have been played at Lifeline but in my opinion the ones that have been played are about as far as you can push boundaries in my opinion. Personally I wouldn't want to hear that kind of record for two hours let alone all night at a northern all-nighter, it's not what I go for.
There is plenty of 60's (and 70's before the crossover section have a go) out there yet to be played to the mainstream without going down the funk route.
Norman soulies as you call them (or whoever called them) don't want that type of sound and they would soon scare folk off, if they wanted that they would go to the venues you mention, I l know some do already but they are a bit more open minded than most.
And the Lifeline, Wilton & 100 club have proved that there are still "brand new" sounds out there yet to be played. There's plenty of life in the soul scene yet!