Categorization is a mess in any field where stuff changes over time. We engage in platonic nonsense essentializing observations into discrete categories with labels, and pushing things into neat little boxes that aren't very representative of reality. And that's in science too!

If you think about biological evolution, for example, we rely on classification to distinctualize between different of animals and their ancestors, but in reality there's a continual gradient between the ancestor and the present. The same troubles happen in linguistic history - the classifications are a product of our minds trying to set about ordering disparate phenomena. Given all that, i still think that the term 'Celtic' is as good as any if one doesn't politicize it.