1. Yes -- as far as we can hear, the prejudice against plywood is that it is "dirt cheap" and therefore not good. FALSE
2. Spruce/redwood for dulcimer tops, IMHO is not worth the expense. In guitars, yes. But dulcimers do not create sound the same way, and the "good" that spruce does in a guitar is negated in a dulcimer because the top is so small and further, is muted by the fretboad.
3. Body wood choice is just one of close to a hundred factors which affect the sound of a dulcimer and is overshadowed by the other 99 factors.
Again, IMHO, dulcimer buyers have been sold "a bill of goods" about the importance of exotic, expensive, sexy-looking woods in making dulcimers. As you said, extremely common woods like poplar make absolutely beautiful sounding instruments.
You asked "Is it a matter of the best luthiers choosing the woods that make the subtly best differences, thereby choice of wood could imply a level of craftsmanship?"
My answer is NO. Almost no dulcimer builders have done any reliable, repeatable quantitatively measured experiments to prove "beyond a shadow of doubt" that any woods make any subtle or not so subtle differences in dulcimer sound.
They would like you to think that because they use sexy, expensive woods that that implies "a certain high level of craftsmanship". But it does not. A high level of craftsmanship is found only in those dulcimer builders who can make any woods, or even materials like cardboard or Legos sound good.
[donning asbestos suit to weather incipient firestorm]